board of directors - tata teleservices...5 s seeking appointment / reappointment at the ann gm) l...
TRANSCRIPT
BOARD OF DIRECTORS
Mr. Kishor A. Chaukar
Mr. Amal Ganguli
Mr. Nadir Godrej
Prof. Ashok Jhunjhunwala
Mr. D.T. Joseph
Mr. N. S. Ramachandran
Mr. S. Ramadorai
Mr. Anil Sardana
Mr. Koichi Takahara
Dr. Mukund Rajan
(Chairman)
(Managing Director)
COMPLIANCE OFFICER
INVESTOR SERVICES
STATUTORY AUDITORS
REGISTRARS & SHARE TRANSFER AGENTS
REGISTERED OFFICE
Mr. Madhav Joshi
Mr. Hiten Koradia
M/s. Deloitte Haskins & Sells
TSR Darashaw Limited
Chief Legal Officer & Company Secretary
Deputy Manager - Investor RelationsTel: 91 22 6661 5152e-mail: [email protected]
Chartered Accountants
12, Dr. Annie Besant Road,
Opp. Shiv Sagar Estate,
Worli, Mumbai - 400 018.
6-10, Haji Moosa Patrawala Industrial Estate,
20, Dr. E. Moses Road,
Near Famous Studio, Mahalaxmi,
Mumbai - 400 011.
Tel: 91 22 6656 8484
Fax: 91 22 6656 8494 / 6656 8496
Email: [email protected]
Website: www.tsrdarashaw.com
Voltas Premises, T B Kadam Marg,
Chinchpokli, Mumbai - 400 033.
Tel: 91 22 6661 5445
Fax: 91 22 6660 5516 / 5517
e-mail: [email protected]
Website: www.tataindicom.com
1
CONTENTS
Notice
Directors' Report
Corporate Governance Report
Management Discussion and Analysis of Financial Condition and Results of Operations
Auditors' Report
Balance Sheet
Profit & Loss Account
Schedules forming part of the Balance Sheet and Profit & Loss Account
Cash Flow Statement
Balance Sheet Abstract and General Business Profile
Auditors' Report
Consolidated Balance
Consolidated Profit & Loss
Schedules forming part of the Consolidated Balance Sheet and Profit & Loss
Consolidated Cash Flow
Statement under Section 212 of the Companies Act, 1956 related to Subsidiary
Consolidated Financial Statements
Sheet
Account
Account
Statement
Companies
Financial Year 2007-08
Financial Year 2008-09
Directors’ Report and Financial Statements of the Subsidiary Company -21st Century Infra Tele Limited (formerly 21st Century Infra Tele Private Limited)
Page No.
3
6
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34
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56
57
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60
77
78
79
83
th14 Annual Report 2008-09
2
NOTICE
Notice is hereby given that the Fourteenth Annual General Meeting ofTataTeleservices (Maharashtra) Limited will be held on, Bajaj Bhavan, Jamnalal Bajaj Marg,
226, Nariman Point, Mumbai - 400 021 to transact the following business:
1. To consider and, if thought fit, to pass, with or without modifications, if any, the following as an Ordinary Resolution:
“RESOLVED that the Company's audited Balance Sheet as at March 31, 2009, the audited Profit and Loss Account andthe audited Cash Flow Statement for the financial year ended on that date together with Directors' and Auditors' Reportthereon be and are hereby approved and adopted.
2. To consider and, if thought fit, to pass, with or without modifications, if any, the following as an Ordinary Resolution:
“RESOLVED THAT M/s Deloitte Haskins & Sells, Chartered Accountants, retiring auditors of the Company, be and arehereby re-appointed as the Auditors of the Company to hold office from the conclusion of this meeting until theconclusion of the next Annual General Meeting of the Company on remuneration to be decided by the Board ofDirectors.”
3. To consider and, if thought fit, to pass, with or without modifications, if any, the following as an Ordinary Resolution:
“RESOLVED THAT Mr. N. S. Ramachandran, who retires from the office of Director by rotation in this Annual GeneralMeeting and being eligible offers himself for re-election, be and is hereby re-elected a Director of the Company, whoseoffice shall be liable to retirement by rotation.”
4. To consider and, if thought fit, to pass, with or without modifications, if any, the following as an Ordinary Resolution:
“RESOLVED THAT Prof. Ashok Jhunjhunwala, who retires from the office of Director by rotation in this Annual GeneralMeeting and being eligible offers himself for re-election, be and is hereby re-elected a Director of the Company, whoseoffice shall be liable to retirement by rotation.”
5. To consider and, if thought fit, to pass, with or without modifications, if any, the following as an Ordinary Resolution:
“RESOLVED THAT Mr.Kishor A.Chaukar, who was appointed as an Additional Director of the Company and who holdsoffice upto the date of this Annual General Meeting of the Company in terms of Section 260 of the Companies Act, 1956(Act) and in respect of whom the Company has received a notice pursuant to Section 257 of the Act, be and is herebyappointed a Director of the Company, liable to retire by rotation.”
6. To consider and, if thought fit, to pass, with or without modifications, if any, the following as an Ordinary Resolution:
“RESOLVED THAT Mr. Amal Ganguli, who was appointed as an Additional Director of the Company and who holdsoffice upto the date of this Annual General Meeting of the Company in terms of Section 260 of the Companies Act, 1956(Act) and in respect of whom the Company has received a notice pursuant to Section 257 of the Act, be and is herebyappointed a Director of the Company, liable to retire by rotation.”
7. To consider and, if thought fit, to pass, with or without modifications, if any, the following as an Ordinary Resolution:
“RESOLVED THAT Mr.D.T. Joseph, who was appointed as an Additional Director of the Company and who holds officeupto the date of this Annual General Meeting of the Company in terms of Section 260 of the Companies Act, 1956 (Act)and in respect of whom the Company has received a notice pursuant to Section 257 of the Act, be and is herebyappointed a Director of the Company, liable to retire by rotation.”
8.
T B Kadam Marg,Chinchpokli,Mumbai - 400 033.
Mumbai,July 2, 2009 Chief Legal Officer & Company Secretary
Thursday, August 13, 2009 at 1500 hours at Kamalnarayan Bajaj Hall & Art Gallery
ORDINARY BUSINESS
SPECIAL BUSINESS
Registered Office:
Madhav Joshi
”
To consider and, if thought fit, to pass, with or without modifications, if any, the following as an Ordinary Resolution:
“RESOLVED THAT Mr. Koichi Takahara, who was appointed as an Additional Director of the Company and who holdsoffice upto the date of this Annual General Meeting of the Company in terms of Section 260 of the Companies Act, 1956(Act) and in respect of whom the Company has received a notice pursuant to Section 257 of the Act, be and is herebyappointed a Director of the Company, liable to retire by rotation.”
By order of the BoardVoltas Premises, For TataTeleservices (Maharashtra) Limited
3
Notes:
A MEMBER ENTITLED TO ATTEND AND VOTE IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE ATTHE MEETING INSTEAD OF HIMSELF AND A PROXY NEED NOT BE A MEMBER
Monday, August 3, 2009Thursday,August 13,2009
EXPLANATORY STATEMENT PURSUANTTO SECTION 173 (2) OFTHE COMPANIES ACT,1956
Item Nos.5 to 8
Appointment of Directors liable to retire by rotation
1.. A proxy, in order to be effective,
should be deposited at the registered office of the Company not less than 48 hours before the commencement of themeeting.
2. The Explanatory Statement pursuant to section 173(2) of the Companies Act, 1956 in respect of the business underItem No .5 to above are annexed hereto and forms part of this Notice.The relevant details as required by Clause 49 ofthe Listing Agreements entered into with the Stock Exchanges, of persons seeking appointment/re-appointment asDirectors are also annexed.
3. The Register of Directors' Shareholding, Register of Proxies and Statutory Auditors' Certificate on Employee StockOption Plan would be available for inspection by the Members, at the Meeting. All documents referred to in theaccompanying Notice and Explanatory Statement are also open for inspection by the Members at the registered officeof the Company on all working days between 11.00 a.m.to 1.00 p.m.up to the date of Annual General Meeting.
4. The Register of Members and Share Transfer Books of the Company will remain closed fromto (both days inclusive).
5. Members/proxies should bring duly filled Attendance Slips to attend the Meeting.
6. A circular on the Nomination facility is available on the Company's web-site under the link “TTML”under the “About Us” link. The shareholders holding shares in physical mode only are requested to go through thecircular and appoint nominee/s, if any, in respect of their physical shareholdings at the earliest.
7. Members whose shareholding is in electronic mode are requested to direct change of address notifications to theirrespective Depository Participants.
Mr. Kishor A. Chaukar and Mr. Amal Ganguli were appointed as Additional Directors of the Company with effect from March24, 2009. Mr. D. T. Joseph was appointed as Additional Director of the Company with effect from May 8, 2009. Mr. KoichiTakahara was
As per the provisions of the Companies Act, 1956 (Act), the above Directors, hold office only upto the date of the forthcomingAnnual General Meeting of the Company.The Company has received Notices along with requisite deposit under Section 257of the Act, proposing their appointment as a Director of the Company.
Details regarding the persons proposed to be appointed as Directors and their brief resume have been given in the Annexureattached to the Notice.Keeping in view the experience and expertise of these persons, their appointment as Directors of theCompany is recommended by the Board.
Mr. Kishor A. Chaukar, Mr. Amal Ganguli Mr. D T. Joseph are concerned or interested in theresolutions at Item Nos.5 to
The Board commends the resolutions at Item Nos.5 to for approval of the Members.
www.tataindicom.com
appointed as Additional Director of the Company with effect from July 1, 2009.
and Mr. Koichi Takahara8
By order of the BoardVoltas Premises, ForT B Kadam Marg,Chinchpokli,Mumbai - 400 033.
Mumbai,July 2, 2009 Chief Legal Officer & Company Secretary
Registered Office:TataTeleservices (Maharashtra) Limited
Madhav Joshi
s 8
, .of the Notice relating to their own appointment.
8 of the Notice
4
th14 Annual Report 2008-2009
5
Deta
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Date
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DIRECTORS' REPORT
Dear Members,
The Directors have pleasure in presenting the 14 Annual Report together with the audited financial statements of theCompany for the year ended March 31, 2009 and other accompanying reports, notes and certificates.
The financial results of the Company's operations during the year are given below:(Rs. in crores)
The total revenue grew by 14.77% to Rs. 2,053.96 crores. The subscriber base grew by 48% to cross 74 lakhs (in March2009), mainly through the increased additions to the Prepaid Mobile subscriber base. A significant portion of this increasetook place in semi-urban and rural Maharashtra, where income levels were lower th
tariffs down, resulted in lower Average Revenue per User (ARPU) compared to theprevious year. Cost optimization efforts, however, ensured a lower rate of increase of 12.02% in operating expenses,compared with 14.77% increase in revenues.The Company reported a positive EBIDTA of Rs.593.18 crores, representing asignificant improvement over the previous year's EBIDTA of Rs.485.55 crores.
During the year, the Company consolidated its position in the market by increasing its share of new additions in the wirelessmarket (i.e. fixed wireless and mobile).
India today has the second largest telecom network in the world after China. As of May 2009, there were more than 452million telephone connections in the country. Approximately 10-15 million mobile connections are being added every month.The national mobile tele-density is about 39 per hundred, while it is 75 per hundred in cities like Mumbai and about 13 perhundred in rural areas.Telephone connections are expected to touch the 500 million mark by the year 2010.Major growth willcome from rural and semi-urban areas.
The Company holds two Unified Access (basic + cellular) Service Licences (UASL), one for Mumbai Metro and the other forthe Rest of Maharashtra and Goa.The current subscriber base of more than 75 lakhs consists of CDMA wireless subscribersand wireline subscribers.The Company will launch its GSM services in the next few months.Cost efficiencies will be achievedin the GSM roll-out by synergizing with the infrastructure already created for the CDMA deployment.
During the year, the Company focused on increasing its retail presence to penetrate the market better with its variousproducts and services. The wireless/mobile subscriber base increased from 46.80 lakhs to 69.58 lakhs. This growth wasfueled by the increase in network coverage, accompanied by the introduction of new handsets at attractive prices, and theintroduction of innovaive tariffs.
th
Financial Results
Products and Services
an the urban centres; this, accompaniedby competitive pressures which pulled
6
th14 Annual Report 2008-2009
Particulars 2008-09 2007-08
Telecom Revenue 1,941.68 1,707.19
Other Income 112.28 82.41
Total Income 2,053.96 1,789.60
Expenditure 1,460.78 1,304.05
Earnings Before Interest, Depreciation,Tax and Amortisation 593.18 485.55
(EBIDTA)
Finance & Treasury Charges (Net) 304.78 171.01
Depreciation 446.79 439.35
Loss before tax 158.39 124.81
Extraordinary item - -
Loss before tax 158.39 124.81
Fringe Benefit tax 1.21 0.93
Loss after tax 159.60 125.74
The Company continued to focus on value added service offerings.The Company is a Category A (National) ISP Licenseeand offers a broad range of Internet-related product offerings including Digital Subscriber Lines (DSL), leased lines and dial-up internet access. The Company, along with Tata Teleservices Limited (TTSL), has a national footprint for its popular TataIndicom conference call service, with 15 Points of Presence across the country for providing local access to conferencebridges.
During the year, the Company introduced several attractive product and service propositions that addressed specificcustomer needs, including:
The Company has been rated as the No. 1 wireless telecom service provider in terms of overall customer satisfaction acrossthe Mumbai and Maharashtra Circles in independent studies commissioned byTelecom Regulatory Authority of India (TRAI).The Company's network has also been rated in successive TRAI reports as the only congestion free network acrossMaharashtra and Mumbai.
During the year, the Company rolled out CDMA wireless services in 583 new towns in Maharashtra and Goa.The Companycovered more than 95% of development blocks and is eligible to get the concession on license fees for extensive rollout as perthe DoT notification. It now offers services in 1,148 towns. The Company's subscribers are therefore able to enjoyuninterrupted services while traveling by road and rail along major travel routes in Maharashtra and Goa.
The Company has laid over 1500 kms of buried fibre across Mumbai and already connects over 20,000 buildings withbroadband services.The Company would continue to make investments to strengthen its Digital Mumbai offerings and wouldincrease voice and data penetration in already wired buildings, besides enhancing the customer value proposition withinitiatives like combo offers of voice and broadband, partnerships with content providers, and brand promotion through aDigital Mumbai portal.
The Company has undertaken ISO 9001:2000 certification to demonstrate its capability to consistently provide services thatenhance customer satisfaction through effective deployment of a quality management system. The Company became thefirst basic telecommunication provider to get the coveted ISO 9001:2000 certification in August 2002. In the recentCertification Audit conducted by TUV India in November 2008, the Company was awarded a Certificate of Continuation forISO 9001:2000 with ‘Nil’Non-Conformance.
The Company is also taking active part in the Tata Business Excellence Model (TBEM) process, with knowledge sharing andappropriate support being extended byTata Quality Management Services (TQMS), a division ofTata Sons Limited.
The Company attaches utmost importance to its human resources which are very critical for a service organization like theCompany. Entry of 4-5 new service providers has provided increased choice to customers, leading to additional time andefforts to acquire and retain customers, thereby creating increasing pressures to retain valuable, trained human resources.Increased job opportunities in telecom, media, retail and other fields have made retention of good employees verychallenging. The Company has been striving towards institutionalizing a performance oriented culture and also creating'Ideal Place to work'.
New Customer Offerings
Recognition of Customer Service and Network quality
Network Rollout
Digital Mumbai
Quality and Processes
Human Resources
·
·
·
·
Photon+ express wireless broadband service, offering speeds upto 3.1 Mbps, 20 times faster than other wirelesstechnology.
ultra high speed broadband data products, offered over Ethernet, leveraging the highly reliable TataIndicom wireline network in Mumbai to deliver to retail customers for the first time speeds of upto 100 Mbps.
on mobile using SMS like checking balance, mini statement, request for cheque books and checkson loan and Credit Card accounts, transfer of funds and payment of bills, and information on Mutual Fund policies.
offering the convenience of being constantly accessible on mail while undertaking parallelactivities such as talking on the phone and surfing the internet, scheduling and coordinating appointments in the middleof meetings, and updating business databases. Key features of the BlackBerry® 8830 include Seamless InternationalRoaming, Email,Voice calls,Wireless Internet, Organizer, SMS, and Instant Messaging.
Power Launcher
Banking activities
BlackBerry® - 8830
TM
TM
7
It provides extensive training and works for employee development and retention through various initiatives. Regularcommunication channels are maintained with the employees through Open Door Policy, Town Halls, Departmental meetsand other initiatives, some of which are managed by the employees themselves through voluntary participation. The HRsystems e.g. recruitment, performance management system, rewards and recognition, have been aligned with the businessobjectives of the Company.
a) There have been many regulatory changes, prominent among which have been -
i. Termination of Access Deficit Charge (ADC) which was payable by all operators to Bharat Sanchar Nigam Limited(BSNL).
ii. Termination charges payable to terminating operators have been reduced to 20 paise from 30 paise per minutewhich will bring down income as well as expenditure.
iii. The Department of Telecommunications (DoT) has taken steps to implement Mobile Number Portability (MNP) inMetros by September 2009. It has divided the country into 2 zones and has signed licence agreements with twoclearing/porting agencies.
iv. The Hon'ble Delhi High Court and the Telecom Dispute Settlement Appellate Tribunal (TDSAT) upheld the validityof DoT's decision to allow use of dual technology and allocation of dual technology spectrum.
b) The Company has also been a party to some important litigation like FixedWireless ADC demands of BSNL of 2004-05,the DoT's attempt to lodge a counter-claim on the Company for not signing in 1997 the licence agreement for basicservices in the Karnataka circle, the penalty imposed by the DoT for the launch of innovative Push to Talk services, andindustry litigation on exclusion of revenues unrelated to licensed activities for determining licence fee liability.
Information on the regulatory developments and important litigation has been provided in the report on ManagementDiscussion & Analysis of Financial Condition and Results of Operations which forms part of this Annual Report. There hasbeen no appreciable progress in these cases since the last Annual Report.
The Company had acquired a Wholly Owned Subsidiary i.e. 21st Century Infra Tele Limited (CITL) with effect from July 1,2008.A statement pursuant to Section 212 of the Companies Act, 1956, in respect of CITL and its financial statements for thefinancial year 2007-08 and 2008-09 together with the Report of the Directors and Auditors thereon, are attached to theaccounts of the Company.
In view of losses, the Directors regret their inability to recommend any dividend for the year under consideration. Noappropriations are proposed to be made for the year under consideration.
Mr. Ratan N. Tata relinquished the office of Director and Chairman of the Company and Mr. Arunkumar R. Gandhi alsorelinquished the office of Director of the Company with effect from March 23, 2009.The Board records its sincere appreciationof the valuable services rendered by them.
Mr. Kishor A. Chaukar was appointed as an Additional Director and Chairman of the Company and Mr. Amal Ganguli wasappointed as an Additional Director (Independent Director) with effect from March 24, 2009. Mr. D.T. Joseph was appointedas an Additional Director (Independent Director) with effect from May 8, 2009. Mr. Koichi Takahara was appointed as anAdditional Director w.e.f. July 1, 2009. Accordingly, resolutions seeking the approval of the Members for the appointment ofMr. Chaukar, Mr. Ganguli, Mr. Joseph and Mr. Takahara as Directors of the Company and re-appointment of Mr.Ramachandran and Prof. Jhunjhunwala who retire by rotation and offer themselves for re-election have been incorporated inthe Notice of the forthcoming Annual General Meeting along with brief details about them. The Board recommends theseappointments in the interests of the Company.
The Board has re-appointed M/s. Axis Risk Consulting Services Private Limited as the Internal Auditors, effective April1, 2009.
M/s Deloitte Haskins & Sells, Chartered Accountants, the present statutory auditors retire at this meeting and are eligible forre-appointment.The Audit Committee and the Board recommend their re-appointment.
Regulatory Developments and Important Litigation
Subsidiary
Dividend & Appropriations
Directors
Internal Auditors
Statutory Auditors
8
th14 Annual Report 2008-2009
Statutory Disclosures
Directors Comments on Auditors' Observations:
·
·
·
·
Directors' Responsibility Statement
Auditors' Observations
Fixed Deposits
Balance Sheet Abstract and Company's General Business Profile
Conservation of Energy,Technology Absorption and Foreign Exchange Earnings and Outgo
Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956 (Act), the Directors, based on therepresentations received from the operating management, confirm that:
1. In the preparation of the annual accounts, the applicable accounting standards have been followed and there areno material departures;
2. They have, in the selection of the accounting policies, consulted the Statutory Auditors, and have applied themconsistently and made judgements and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year and of the loss of the Company for theperiod;
3. They have taken proper and sufficient care, to the best of their knowledge and ability, for the maintenance ofadequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities;
4. They have prepared the annual accounts on a going concern basis.
Attention is invited to the following paragraphs in the Annexure to the Auditors' Report wherein they have observed asfollows:
xi) In our opinion, and according to the information and explanations given to us, the accumulated losses of theCompany, at the end of the financial year are more than fifty percent of its net worth. The Company has notincurred cash losses during the financial year under audit and in the immediately preceding financial year.
xvi) According to information and explanations given to us and on overall examination of the balance sheet of theCompany, funds raised on short term basis have, prima facie, been used for long term investment to the extent ofRs.1,909.70 crores.
accumulatedlosses of the Company at the close of the year have exceeded its paid up capital and reserves, this, is not uncommon fortelecommunication service providers in their initial years of commercial operations, due to high operation costs of heavyinfrastructure and high and continuing capital requirement for building the network. The Company is consistentlymaking cash profits, and has been able to grow its subscriber base and network.The Company is in advanced stages offinancial closure for proposed GSM and other Network Roll out and would be able to meet its further fundingrequirements.The Company in the previous year had also paid Rs.392.66 crores as license fees for providing servicesusing GSM technology under the existing licenses and expects to roll-out the related services during the next financialyear. Based on the foregoing considerations, the Company is confident of it's ability to continue in business as a goingconcern and the accounts have accordingly been prepared on this basis.
The Company has not accepted any deposits within the meaning of Section 58A of the Act, and the rules made thereunder.
Information pursuant to Department of Company Affairs' notification dated May 15, 1995, relating to the Balance SheetAbstract and General Business Profile of the Company is given in the Annual Report for information of the shareholders.
The disclosures as required under the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules,1988 are given below:
(i) Energy Conservation: Electricity is used for the working of the Company's telephone exchanges and othernetwork infrastructure equipment. The Company regularly reviews power consumption patterns across its
With regard to uditors' observation in paragraph (xi) in the nnexure to the Auditors' Report
With regard to uditors' observation in paragraph (xvi) in the nnexure to the Auditors' Report, while the Companyhad availed short term bridge loans for its expansion plan, the Company has its Business Plan appr ised by IDBIBank Limited and is in advance stages of financial closure and the short term loans would be replaced by long termloans.
the A A , while the
the A Aof had a
the d
9
network and implements requisite improvements/changes in the network or processes in order to optimize powerconsumption and thereby achieve cost savings.
(ii) Technology Absorption: The Company has not imported any technology. The Company has not yet establishedseparate R & D facilities.
(iii) Foreign Exchange Earnings and Outgo:(Rs. crores)
The particulars of employees as required under Section 217(2A) of the Act, read with the Companies (Particulars ofEmployees) Rules, 1975 forms part of this report. However, in pursuance of Section 219(1)(b)(iv) of the Act, this report isbeing sent to the shareholders of the Company excluding the aforesaid information. Any Member interested in obtaining acopy of such information may write to the Company Secretary at the registered office of the Company.
The Company had issued stock options during the period 1999-2001. The information as required to be disclosed in theAnnual Report pursuant to the Securities & Exchange Board of India (Employees' Stock Option Schemes and Employees'Stock Purchase Scheme) Guidelines, 1999 is annexed to this Directors' Report as Annexure I and forms part of this report.
A certificate from M/s Deloitte Haskins & Sells (DHS), Statutory Auditors, with regard to the implementation of the Company'sEmployees' Stock Option Plan, would be open for inspection in the ensuing Annual General Meeting.
A report on Corporate Governance appears after this report. A certificate from DHS with regard to compliance with thecorporate governance code by the Company is annexed hereto as Annexure II and forms part of this report.
The Company has fully complied with all mandatory requirements prescribed under Clause 49 of the listing agreements withthe Bombay Stock Exchange Limited (BSE) and the National Stock Exchange of India Limited (NSE).The Company has alsoimplemented some of the non-mandatory provisions.
The Directors wish to place on record their sincere appreciation of the assistance and support extended by the employees,customers, financial institutions, banks, vendors, Government and others associated with the activities of the Company.
For and on behalf of the Board of Directors
Mumbai,
July 2, 2009 Chairman
Acknowledgements
Kishor A.Chaukar
Particulars of Employees and Stock Options
Corporate Governance
10
th14 Annual Report 2008-2009
Particulars 2008-09 2007-08
Earnings NIL NIL
Outgo 22.99 21.88
Capital Goods 364.39 197.88
ANNEXURE I
PARTICULARS PURSUANT TO THE SECURITIES & EXCHANGE BOARD OF INDIA (EMPLOYEES' STOCK OPTIONSCHEMES AND EMPLOYEES' STOCK PURCHASE SCHEME) GUIDELINES, 1999
Options granted:
(i) Cumulative (cum.) 37,33,550
(ii) During the year 2008-09 Nil
Pricing formula Not Applicable
Options vested (cum.) 25,13,630
Options exercised (cum.) 24,54,855
Options lapsed (cum.) 12,70,745
Total number of shares arising as a result of exercise of options (cum.) 24,54,855
Variation of terms of options Not varied
Money realised by exercise of options (cum.) (Rs.) 2,45,48,550
Total number of options in force 7,950
Options granted to senior managerial personnel during year 2008-2009: NIL
Any other employees to whom 5% or more of the total options have been granted during the year None
Identified employees to whom options have been granted equal to 1% or more of the issued capital
(excluding outstanding warrants & conversions) of the Company at the time of grant None
Diluted Earning Per Share (EPS) pursuant to issue of shares on exercise of option calculated in
accordance with International Accounting Standard (IAS 33)
- with extra ordinary item (Rs.) (0.70)
- without extra ordinary item (Rs.) (0.70)
Number of employees to whom options have been granted:
(i) Cumulative* till March 31, 2009 349
(ii) During FY 2008-09 Nil
* Also includes employees who have since left the employment of the Company
11
ANNEXURE IIAUDITORS’ CERTIFICATE
To the members ofTataTeleservices (Maharashtra) Limited
Deloitte Haskins & Sells
A. B. Jani
We have examined the compliance of conditions of Corporate Governance by Tata Teleservices (Maharashtra) Limited for the yearended on 31 March 2009, as stipulated in Clause 49 of the Listing Agreement of the said Company with the stock exchanges.
The Compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination was limited toprocedures and implementation thereof, adopted by the Company for ensuring compliance of the conditions of CorporateGovernance. It is neither an audit nor an expression of opinion on the financial statements of the Company.
In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company hascomplied in all material aspects with the conditions of Corporate Governance as stipulated in the above-mentioned ListingAgreement.
We state that no investor grievance is pending for a period exceeding one month against the Company, based on the recordsmaintained by the Investors Services Department and as certified by the Compliance Officer of the Company.
We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency oreffectiveness with which the Management has conducted the affairs of the Company.
st
ForChartered Accountants
PartnerMembership No: 46488
Mumbai, Dated: May 11, 2009
12
th14 Annual Report 2008-2009
CORPORATE GOVERNANCE REPORT FOR THE YEAR 2008-09
STATEMENT OF COMPANY'S PHILOSOPHY ON CORPORATE GOVERNANCE
TATA CODE OF CONDUCT
CODE OF CONDUCT FOR PREVENTION OF INSIDER TRADING
WHISTLE BLOWER POLICY
The Company believes in the highest standards of good and ethical corporate governance practices.The Company's Boardof Directors (hereinafter referred to as 'the Board') has adopted theTata Code of Conduct for its senior management includingthe Managing Director.The Company has also adopted a Code of Conduct for its Non-Executive Directors.Both these Codesare available on the website of the Company i.e. www.tataindicom.com. The Company's corporate governance philosophyhas been further strengthened through the Tata Code of Conduct for Prevention of Insider Trading and Code of CorporateDisclosure Practices.
TheTata Code of Conduct governs:
(a) Conduct of business in consonance with national interest;
(b) Fair and accurate presentation of financial statements;
(c) Being an Equal Opportunities employer;
(d) Prohibition of taking gifts and donations, which can be perceived to be intended to obtain business or uncompetitivefavours;
(e) Practicing political non-alignment;
(F) Maintaining quality of products and services;
(g) Being a good Corporate Citizen;
(h) Ethical conduct;and
(i) Commitment to enhancement of shareholder value.
In compliance with the Securities & Exchange Board of India (Prevention of InsiderTrading) Regulations, 1992 (Regulations),the Company had framed a Code of Conduct for Prevention of Insider Trading and Code of Corporate Disclosure Practices(Code) in line with other Tata Companies for prevention of insider trading and ensuring timely disclosures of all material pricesensitive information in a transparent manner.The above Code had been adopted by the Board at its meeting held on July 19,2004. Consequent to the recent amendments in Regulations, the Company has adopted a revised Code with effect fromMarch 1, 2009. In terms of the Code, specified persons (Directors/Officers/ Designated Employees) of the Company areprohibited from dealing in the securities of the Company during the period when the Trading Window is closed.The TradingWindow for dealing in securities of the Company is closed for the following purposes, namely (a) declaration of financialresults (quarterly, half-yearly and annual), (b) declaration of dividends (interim and final), (c) issue of securities by way ofpublic/rights/bonus issue etc., (d) any major expansion plans or execution of new projects, (e) amalgamation, mergers,takeovers and buy-back, (f) disposal of whole or substantially whole of the undertaking, and (g) any significant changes inpolicies, plans or operations of the Company. In respect of declaration of financial results, theTradingWindow remains closedfrom the end of the respective quarter, half-year or financial year, as the case may be. As regards declaration of interimdividend and other matters referred to in (c) to (g) above, the Managing Director/Chief Executive Officer is required, wellbefore initiation of such activity/project, to form a core team of Designated Employees and/or Designated Group Persons whowould work on such assignment. The Managing Director/Chief Executive Officer is also required to designate a senioremployee who would be in-charge of the project. Such team members are required to execute an undertaking not to deal inthe securities of the Company till the Price Sensitive Information regarding the activity/project is made public or theactivity/project is abandoned and the Trading Window would be regarded as closed for them. The Trading Window is opened24 (twenty-four) hours after the information referred to above is made public.
The Company has adopted a Whistle Blower Policy, which affords protection and confidentiality to whistle blowers.The AuditCommittee Chairman is authorized to receive Protected Disclosures under this policy. The Audit Committee is alsoauthorized to supervise the conduct of investigations of any disclosures made by whistle blowers in accordance with policy.
No personnel have been denied access to the Audit Committee.
13
CODE OF CONDUCT
BOARD OF DIRECTORS
Composition
All Directors and senior management personnel have affirmed compliance with the respective Codes for the financial yearended March 31, 2009.The declaration by the Managing Director in this respect appears elsewhere in this Annual Report.
As on March 31, 2009, the Company had 8 Directors with a Non-Executive Chairman, 7 (88%) of Directors are Non-Executive, and 4 (50%) of them are Independent Directors. The Company is managed by the Managing Director under thesupervision and control of the Board. The Managing Director is assisted by a team of highly qualified and experiencedprofessionals.
The Board has agreed that Non-Executive Directors are not and shall not be responsible for the day-to-day affairs of theCompany.
None of the Directors is a member in more than 10 mandatory committees nor acts as a Chairman in more than 5 mandatorycommittees across all public companies in which they are Directors.
The Board composition and the number of Chairmanships/Directorships of the Board and Chairmanships/Memberships ofthe Committees of the Board held by each of Directors as on March 31, 2009 is given below. Directorships do not includealternate Directorships, Directorships of private limited companies, Section 25 Companies and bodies corporateincorporated outside India, but includes Directorship of the Company. Chairmanships/Memberships of Board Committeescover only Audit and Shareholders/Investor Grievance Committees across all public limited companies (listed as well asunlisted) including those of the Company.
* Appointed as Additional Director and Chairman w.e.f.March 24, 2009.** Appointed as Additional Director w.e.f.March 24, 2009.
14
th14 Annual Report 2008-2009
Chairman Member Chairman Member
Mr. Kishor A. Chaukar* Non-Executive - None 3 11 2 2
(Chairman) Director
Mr. Amal Ganguli** Independent - None - 12 5 5
Director
Mr. Nadir Godrej Independent - None 3 11 1 2
Director
Prof. Ashok Independent 3,700 None - 9 1 5
Jhunjhunwala Director
Mr. N. S. Independent - None - 2 1 2
Ramachandran Director
Mr. S. Ramadorai Non-Executive - None 2 10 1 4
Director
Mr. Anil Sardana Non-Executive - None - 3 - 1
Director
Dr. Mukund Rajan Executive - None - 3 1 1
(Managing Director) Director
Name of the Director No. of Directorships
in all publiccompanies
No. of Committee
Positions held in all
Public Companies
Category Number of
Shares
held in
Company
including
shares held by
dependents
Relationship
with
other
Directors
Board Meetings and Annual General Meeting
Directors' Remuneration
The Board meets at least once in each quarter and the maximum time gap between two Board meetings did not exceed thelimits prescribed in Clause 49 of the listing agreement.Six meetings of the Board were held during the financial year ended onMarch 31, 2009. The meetings of the Board were held on May 20, 2008, July 16, 2008, October 27, 2008, December 24,2008, January 19, 2009 and March 23, 2009.The Annual General Meeting (AGM) was held on August 12, 2008.The details ofparticipation of the Directors of the Company during the financial year ended March 31, 2009 in Board Meetings and AGM ofthe Company is as under:
* Ceased to be a Director with effect from March 23, 2009.
** Appointed as Director with effect from March 24, 2009.
*** Excluding 1 Board Meeting attended through audio conferencing.
# Details provided from the date of appointment.
None of the Non-executive Directors have any material pecuniary relationship or transaction with the Company.
Independent Directors: Sitting fees of Rs. 8,000/- per head per meeting were paid to the Independent Directors for attendingmeetings of the Board and Audit Committee and Rs. 5,000/- per head per meeting for other Committee meetings tillSeptember 30, 2008. With effect from October 1, 2008, the Independent Directors were paid sitting fees of Rs. 15,000/- forevery meeting of the Board, Audit and Remuneration Committee and Rs.5,000/- for every meeting of any other Committee ofthe Board.
Non Executive Non-Independent Directors: Non Executive Non-Independent Directors (except Mr. Ratan N.Tata) were paidRs. 5,000/- per head per meeting for attending Board/Committee Meetings till September 30, 2008.With effect from October1, 2008, no sitting fees were paid to Non-Executive Non-Independent Directors.
The Company also reimburses the out-of-pocket expenses incurred by the Directors for attending Meetings.
The Company pays remuneration by way of salary, allowances, retiral benefits, perquisites, and incentive remuneration to itsManaging Director. Increments are decided by the Remuneration Committee within the salary scale approved by theMembers and the limits approved by the Central Government.The contract with the Managing Director may be terminated byeither party by giving six months notice or the Company paying six months salary in lieu thereof. There is no separateprovision for payment of severance fees.
None of the Directors have been issued any stock options by the Company during the year.
The details of remuneration paid by the Company to its Directors during the financial year 2008-09 is as follows:
15
Name of the Director
Mr. Ratan N. Tata*
Mr. Kishor A. Chaukar**
Mr. Arunkumar R. Gandhi*
Mr. Amal Ganguli**
Mr. Nadir Godrej
Prof. Ashok Jhunjhunwala
Mr. N. S. Ramachandran
Mr. S. Ramadorai
Mr. Anil Sardana
Dr. Mukund Rajan
5
5
6
6
6
6
2
-
6
-
4
4
6
Yes
Yes
Yes
6
#
6
-
6
6
6
Not Applicable
Yes
Yes
No
Attendance at
Last AGM
No. of Meetings during 2008-09
Held Attended
Yes
Not Applicable
No
-
#
***
A) Non Executive Directors
B) Managing Director
Information placed before Board of Directors
AUDIT COMMITTEE
Composition
* Ceased to be a Director w.e.f.March 23, 2009.** Appointed as Director w.e.f.March 24, 2009.
* Incentive Remuneration for FY 2008-09 would be decided by the
All information required to be placed before the Board of Directors under Clause 49 of the listing agreements with the stockexchanges, has been duly placed.
The Audit Committee of the Board of the Company has been constituted in compliance with the provisions of Clause 49 of thelisting agreement read with Section 292A of the Companies Act, 1956 and comprises 3 members, all of whom are Non-Executive Directors and 2 of them are Independent Directors. The Committee functions under the Chairmanship of Prof.Ashok Jhunjhunwala. The Audit Committee meetings are also attended by the Managing Director, Chief Financial Officer,Statutory Auditors and Internal Auditors. The functional heads are also invited as and when required. The CompanySecretary acts as the Secretary to the Committee.The composition of the Committee is as follows:
* Appointed as Member of the Committee w.e.f.March 30, 2009.** Ceased to be a Member of the Committee w.e.f.March 23, 2009.# Details provided from the date of appointment.
Remuneration Committee of the Company in duecourse.
** Incentive Remuneration for FY 2007-08 was paid in FY 2008-09.
16
th14 Annual Report 2008-2009
Name of the Director Sitting Fees (Rs.)
Mr. Ratan N. Tata* -
Mr. Kishor A. Chaukar** -
Mr. Arunkumar R. Gandhi* 15,000
Mr. Amal Ganguli** -
Mr. Nadir Godrej 60,000
Prof. Ashok Jhunjhunwala 117,000
Mr. N. S. Ramachandran 140,000
Mr. S. Ramadorai 5,000
Mr. Anil Sardana 10,000
Name of the Director Salary Allowances Retirals & Incentive Total
(Rs.) (Rs.) Perquisites Remuneration
(Rs.)
Dr. Mukund Rajan 21,60,000 12,27,000 73,71,597 -* 1,07,58,597
Name of Member Category
Prof. Ashok Jhunjhunwala, Chairman Independent Director
Mr. N. S. Ramachandran Independent Director
Mr. S. Ramadorai* Non-Executive Director
Mr. Arunkumar R. Gandhi** Non-Executive Director
5
5
-
5
5
5
-
3
No. of Meetings during
2008-09
AttendedHeld
#
Mr. Charles Antony - - - 77,50,000** 77,50,000
The Audit Committee meets at least once in each quarter and the maximum time gap between two Audit CommitteeMeetings did not exceed the limits prescribed in Clause 49 of the listing agreement.Five Audit Committee Meetings were heldduring the financial year ended on March 31, 2009. The Meetings were held on May 9, 2008, July 9, 2008, July 16, 2008,October 27, 2008 and January 19, 2009.
The terms of reference for the Audit Committee are broadly as under:
a) Overseeing the Company's financial reporting process and the disclosure of its financial information to ensure that thefinancial statements are correct, sufficient and credible.
b) Recommending the appointment and removal of external auditor, fixation of audit fee and also approval of payment forany other services.
c) Reviewing the quarterly, half yearly and annual financial statements before submission to the Board, focusing primarilyon any related party transactions as per Accounting Standard 18.
d) Reviewing with the management, external and internal auditors, the adequacy of internal control systems and ensuringcompliance therewith.
e) Reviewing the adequacy of the internal audit function, including the structure of the internal audit department, staffingand seniority of the official heading the department, reporting structure, and coverage and frequency of internal audit.
f) Discussing with internal auditors any significant findings and follow up thereon.
g) Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraudor irregularity or a failure of internal control systems of a material nature and reporting these matters to the Board.
h) Discussing with external auditors before the commencement of the audit about the nature and scope of audit as well ashaving post-audit discussions to ascertain any areas of concern.
i) Reviewing the Company's financial and risk management policies.
j) Looking into reasons for any substantial defaults in payment to depositors, debenture holders, shareholders (in case ofnon payment of declared dividends) and creditors.
k) Reviewing the functioning of theWhistle Blower Policy adopted by the Company.
l) Reviewing the report on Management Discussion & Analysis of Financial Condition and Results of Operations, to beincluded in the Company's Annual Report to its shareholders.
Management Discussion & Analysis of Financial Condition and Results of Operations, statements of related partytransactions, internal audit reports, fraud-related reports, quarterly results, management letters from Auditors, proposalsand terms of appointment of internal auditors, as a part of financial results statements, have been regularly placed before theAudit Committee for review during the financial year 2008-09.
The Investor Grievance Committee of the Board looks into redressal of the shareholders' complaints in respect of any matterincluding transfer of shares, non-receipt of annual report, non-receipt of declared dividends, dematerialization of shares, IPOrefunds and complaints, issue of duplicates and renewed share certificates, etc.The Committee is authorized to delegate itspowers to officers and employees of the Company and/or of the Company's Registrar and Share Transfer Agent. Thedelegates regularly attend to share transfer formalities at least once every 15 days.The Composition of the Committee is asfollows:
Mr.Madhav Joshi, Chief Legal Officer & Company Secretary, is the Compliance Officer of the Company.
Terms of Reference
INVESTOR GRIEVANCES COMMITTEE
Composition &Terms of Reference
17
Name of the Member Category
Mr. N. S. Ramachandran, Chairman Independent Director
Dr. Mukund Rajan Executive Director
The details of complaints received and redressed during the year is as follows:
*since resolved
The status of complaints is reported to the Board on a quarterly basis.
The Company has constituted a Remuneration Committee for the purpose of approving from time to time, the remunerationpayable to the Managing Director and Executive Director/s and to discharge any other statutory duties and functions as maybe specified under the law, or to perform such task/s as may be entrusted by the Board from time to time. During the financialyear 2008-09, the Committee met once on August 12, 2008. The Company's Remuneration Committee comprises 3Directors, all of whom are Non-Executive Directors and two are Independent Directors.The Committee's composition is asunder:
* Ceased to be a Member of the Committee w.e.f.March 23, 2009.** Became a member of the Committee w.e.f. March 30, 2009.
The Board has also formed other Committees i.e. Ethics and Compliance Committee to consider matters relating to InsiderTrading Code, Nominations Committee to make recommendations regarding the composition of the Board and identificationof Independent Directors to be inducted on the Board and take steps to refresh the composition of the Board from time to timeand Executive Committee to review business and strategy.
The Company has devised a formal Risk Management Framework for risk assessment and minimisation. Further, theCompany assesses the risk management framework periodically.The scope of the Audit Committee includes review of theCompany's financial and risk management policies.
The Company's first statutory meeting was held on April 24, 1995. Till date, the Company has held 13 Annual GeneralMeetings (AGMs) and 12 Extra Ordinary General Meetings of the shareholders.The details of the last 3 AGMs are as under:
Details of special resolutions passed in the above referred meetings are as under:
REMUNERATION COMMITTEE
RISK MANAGEMENT
GENERAL BODY MEETINGS
# Details provided from the date of appointment.
18
Particulars of Section under which special Purpose
the AGM resolution was passed
12 AGM held onth
Section 163 of the Companies Act, 1956 Keeping of statutory records at the office of the
August 24, 2007 Company’s Registrars & Share Transfer Agents
Section 31 of the Companies Act, 1956 Amendment of Articles of Association to allow
conduct of any business through Postal Ballot
th14 Annual Report 2008-2009
Opening Balance
1
Closing Balance
5*
Resolved during the year
209
Received during the year
213
Name of Member Category
Mr. N. S. Ramachandran, Chairman Independent Director
Mr. Ratan N. Tata* Non-Executive Director
Prof. Ashok Jhunjhunwala Independent Director
Mr. Kishor A. Chaukar**# Non-Executive Director
No. of Meetings during 2008-09
Held Attended
1 1
1 1
1 1
- -
Particulars
11 Annual General Meetingth
12 Annual General Meetingth
13 Annual General Meetingth Mumbai
August 10, 2006
August 24, 2007
August 12, 2008
Date Venue
Mumbai
Mumbai
POSTAL BALLOT
RELATED PARTYTRANSACTIONS
COMPLIANCEWITH CAPITAL MARKET LAWS
MEANS OF COMMUNICATION
NTS
IMPLEMENTATION OF NON-MANDATORY CORPORATE GOVERNANCE REQUIREMENTS
MANAGEMENT DISCUSSION & ANALYSIS
GENERAL SHAREHOLDER INFORMATION
Annual General Meeting
A Special Resolution for appointment of Dr. Mukund Rajan as the Managing Director of the Company as contained in theNotice to the shareholders dated April 10, 2008 was passed during the year through Postal Ballot. Mr. Makarand Joshi,Practicing Company Secretary was appointed as the Scrutinizer for overseeing the Postal Ballot process. The abovesaidresolution was passed with the requisite majority, with 99.99% votes cast in favour of the resolution.
The Company had complied with the procedure as specified by Companies (Passing of the Resolutions by Postal Ballot)Rules, 2001 and amendments thereto.The Board has not recommended any pecial esolution for approval of the Membersat the ensuing 14 Annual General Meeting through Postal Ballot.
There were no materially significant related party transactions during the year, which in the opinion of the Board may havepotential conflicts with the interests of the Company at large. Apart from paying sitting fees, there was no pecuniarytransaction undertaken by the Company with the independent/non-executive directors during the year ended March 31,2009.Transactions with related parties are disclosed in Note No.15 of Schedule 17 to the Accounts in the Annual Report.
There has neither been any non-compliance on the part of the Company on any matter related to capital markets during thelast three years, nor have any penalties or strictures been imposed on the Company in this respect.
As required under Clause 49 of the listing agreement, for the financial year 2008-09, the Company has submitted to theBombay Stock Exchange Limited and the National Stock Exchange of India Limited, quarterly compliance reports signed bythe Compliance Officer of the Company, confirming compliance with the mandatory requirements of the said Clause.
The quarterly, half yearly and annual results are published in Marathi and English Newspapers. The financial results,shareholding pattern
The certificate as required under Clause 49 of the listing agreement is furnished by the Managing Director and the ChiefFinancial Officer of the Company to the Board of Directors of the Company with respect to accuracy of financial statementsand adequacy of internal controls.
The Company has implemented the non-mandatory corporate governance requirements prescribed under Clause 49 of thelisting agreement with stock exchanges with respect to Remuneration Committee andWhistle Blower Policy.
The Management Discussion and Analysis is attached and forms part of this Annual Report.
The ensuing Fourteenth Annual General Meeting is scheduled to be held on Thursday, August 13, 2009 at 1500 hours atKamalnarayan Bajaj Hall & Art Gallery, Bajaj Bhavan, Jamnalal Bajaj Marg, 226, Nariman Point, Mumbai - 400 021.
S Rth
s, press releases, and presentations made to institutional investors and analysts are also available onthe website of the Company i.e. .www.tataindicom.com
CERTIFICATION WITH RESPECT TO FINANCIAL STATEME
19
Section 198, 269, 309, 310, 314, 316, Re-appointment of Mr. Charles Antony as Managing
317 of the Companies Act, 1956 Director and the remuneration to be paid for a period
o re-appointment asf 3 years from the date of his
Managing Director of the Company
Section 269, 310, 311 of the CompaniesAct, 1956
Increase in remuneration payable to Mr. Charles
Antony, Managing Director for Financial Year 2006-07
Section 81 of the Companies Act, 1956 Consent for issue of Foreign Currency Convertible
Bonds
FinancialYear
Date of Book Closure
Listing on Stock Exchanges
Stock Code
Market Price Data
The Company follows the April - March, financial year.The financial results for first, second (half yearly) and third quarters aregenerally published in July, October and January respectively. Annual audited financial results are generally published inMay/June.
The financial results are uploaded on the Company's website and can be accessed by choosing the link “TTML” under the“About Us” link on the home page of the website.
The same are also uploaded on the website of the Securities & Exchange Board of India viz. via theElectronic Data Information Filing and Retrieval System and are available for public viewing via the link “EDIFAR” appearingon the home page of the said website.
The share transfer books & the Members' register will be closed between Monday, August 3, 2009 to Thursday, August 13,2009 (both days inclusive) for the purposes of the Fourteenth Annual General Meeting.
The Company's equity shares are listed on the following exchanges:
1 Bombay Stock Exchange Limited (BSE)P.J.TowersDalal StreetMumbai - 400 023.
Bandra (E), Mumbai - 400 051.
The Company has paid annual listing fees to both the stock exchanges within the stipulated time.
The Foreign Currency Convertible Bonds (FCCBs) issued by the Company in June 2004 are listed on the Singapore StockExchange (SGX).
The stock codes of the Company's equity shares on the BSE & NSE are as follows:
The High & Low on closing price, during each month in the last financial year, of the Company's shares are as follows:
(Amount in Rupees)
www.sebi.gov.in
2 National Stock Exchange of India Limited (NSE)Exchange Plaza, 5th floor,Plot No.C/1, 'G' Block,Bandra-Kurla Complex,
20
532371
TTML
BSE
NSE
th14 Annual Report 2008-2009
Month
High Low High Low
April 2008 37.00 27.40 37.00 27.45
May 2008 37.60 31.45 37.55 31.45
June 2008 30.40 24.15 30.40 24.10
July 2008 26.10 22.45 26.15 22.40
August 2008 29.25 25.10 29.25 25.05
September 2008 28.05 21.60 28.10 21.65
October 2008 21.75 12.75 21.75 12.70
November 2008 20.52 13.88 20.50 13.90
December 2008 21.75 19.50 21.75 19.50
January 2009 22.80 21.65 22.80 21.65
February 2009 23.55 22.55 23.60 22.55
March 2009 24.45 19.50 24.65 19.60
NSEBSE
Performance of the Company's Share Price in comparison to BSE and NSE Indices
Registrar and ShareTransfer Agents
TSR Darashaw Limited
ShareTransfer System
Distribution of Shareholding
The performance of Company’s Share Price vis-à-vis the broad based BSE and NSE Indices during the financial year 2008-09 is as under:
The Company has appointedTSR Darashaw Limited (formerlyTata Share Registry Limited) as its Registrar & ShareTransferAgents. Shareholders are advised to approach TSR Darashaw Limited on the following address for any shares & dematrelated queries and problems:
6-10, Haji Moosa Patrawala Industrial Estate,
20, Dr.E.Moses Road, Near Famous Studio,
Mahalaxmi, Mumbai - 400 011.
Tel.:91 22 6656 8484
Fax:91 22 6656 8496
E-mail:
Website:www.tsrdarashaw.com
All physical share transfers are handled by TSR Darashaw Limited (TSR). The transferee is required to furnish the transferdeed duly completed in all respects together with the share certificates to TSR at the above said address in order to enableTSR to process the transfer. As regards transfers of dematerialized shares, the same can be effected through the demataccounts of the transferor/s and transferee/s maintained with recognized Depository Participants.
The broad shareholding distribution of the Company as on March 31, 2009 with respect to categories of investors was asfollows:
21
Category of Investors
Promoters & Promoter Group Companies
Foreign Investors
(FIIs / NRIs / OCBs / Foreign Banks / Foreign Corporate Bodies)
Financial Institutions / Banks / Mutual Funds
Corporate Bodies
Individuals
TOTAL
2.18
19.19
100.00
65.77
2.69
2.40
5.68
23.46
100.00
Percentage of Shareholding
77.76
0.56
0.31
As on March 31, 2008As on March 31, 2009
Particulars
Company’s BSE NIFTY
Price (Rs.)Share Sensex
As on April 1, 2008 28.45 15,626.62 28.30 4,739.55
As on March 31, 2009 22.80 9,708.50 22.85 3,020.95
Change (%) (19.86) (37.87) (19.26) (36.26)
Company’s Share Price v/s BSE Company’s Share Price v/s NSE
Company’s
Price (Rs.)Share
The broad shareholding distribution of the Company as on March 31, 2009 with respect to size of holdings was as follows:
The Company had a total of 6,06,711 shareholders as on March 31, 2009.
The quarterly shareholding pattern filed with the stock exchanges are also uploaded on the website of the Company andwebsite of the Securities & Exchange Board of India viz Electronic Data Information Filing andRetrieval System and are available for public viewing via the link “EDIFAR”appearing on the home page of the said website.
As of March 31, 2009, 99.82% of the total equity shares issued by the Company have been dematerialised.The equity sharesof the Company are under compulsory dematerialized form. The equity shares of the Company are available fordematerialisation with both the depositories in India - National Securities Depository Limited (NSDL) and Central DepositoryServices (India) Limited (CDSL).
The Company has not issued any GDRs/ADRs/Warrants.The Company has issued Employee Stock Options.These optionsare convertible into equity shares of the Company on payment by the option holders of the stipulated conversion price ofRs.10 per share. Please refer Annexure II of the Report of the Board of Directors for further details regarding the EmployeeStock Options.
In June 2004, the Company issued Foreign Currency Convertible Bonds (FCCBs) aggregating US$ 125 million to foreigninvestors convertible at Rs. 24.96 per share (including a premium of Rs. 14.96 per share). Post Rights Issue of equity sharesof the Company, the conversion price was adjusted to Rs. 24.49 per equity share w.e.f. October 28, 2006. During the year,US$ 2 million FCCBs were converted into 36,26,786 equity shares. FCCBs with aggregate principal value of US$ 111.759million have been converted into equity shares of the Company. FCCBs with aggregate principal value of US$ 13.241 millionwere outstanding as on March 31, 2009.
The Company currently provides services in about 1,148 towns in the States of Maharashtra and Goa through its telephoneexchanges located at Turbhe (Navi Mumbai), Nariman Point (Mumbai), Marol (Mumbai), Andheri (Mumbai), Pune, Nasik,Panjim, Nagpur, and Kolhapur.
Shareholders are requested to direct all equity share related correspondence /queries toTSR Darashaw Limited and only thenon-share related correspondence and complaints regarding TSR Darashaw Limited should be addressed to theCompliance Officer at the registered office of the Company.Shareholders holding shares in electronic mode (dematerialized)should address all shares-related correspondence to their respective Depository Participants only.
The certificate dated May 11, 2009 issued by M/s Deloitte Haskins & Sells, Statutory Auditors on compliance with theCorporate Governance requirements by the Company is annexed to the Directors' Report.
Dematerialization of Shares & Liquidity
Outstanding Employee Stock Options,GDRs,ADRs,etc.
Where we offer service
Address for correspondence
Auditors' Certificate
s. via thewww.sebi.gov.in
22
th14 Annual Report 2008-2009
Total
1 to 500
501 to 1000
to 2000
to 3000
to 4000
to 5000
to 10000
to above
1001
2001
3001
4001
5001
10001
Range (No. of Shares)
83.18 0.46
100.00 100.00
0.95 0.62
1.93 0.81
1.46 1.74
0.85 0.74
% of Paid-up Capital % of Total No. of Shareholders
5.05 76.41
3.63 13.33
2.95 5.89
MANAGEMENT DISCUSSION & ANALYSIS OF FINANCIALCONDITION AND RESULTS OF OPERATIONS
INDUSTRY STRUCTURE AND DEVELOPMENTS
The Indian Telecom Services Sector has witnessed tremendous growth in the recent past, primarily driven by intensecompetition, entry of new operators, falling tariffs, and reforms in the regulatory set-up.
India today has the second largest telecom network in the world after China. As of May 2009, there were more than 452million telephone connections in the country of which 415 million were mobile connections. Approximately 10-12 millionmobile connections are being added every month.The tele-density which was less than 1 per hundred in 1984 is today over38 per hundred (including rural tele-density of 13%).Telephone connections are to be expected to touch the 500 million markby the year 2010.
The growth rate in rural areas though not matching with urban areas is significant. Despite a steady fall in the AverageRevenue Per User (ARPU) with ever declining tariffs (Indian telecommunication tariffs are the lowest in the world), Indiantelecom companies have been expanding their network and increasing their coverage of areas in rural India.
In India, there are various kinds of telecom service licences, including access licences i.e. basic/fixed service, cellular,Unified Access (basic + cellular) service; carrier licences i.e. national long distance and international long distance; licencesfor internet services; VSAT licences; and IP-1 registration for passive infrastructure (towers, ducts, fibre). Unified AccessService Licence (UASL) operators like the Company apart from fixed & mobile services can also provide internet, internettelephony and broadband services under their UASL licence.Unrestricted competition is allowed in all the categories.
Details of major developments on the regulatory front are as under:
The Telecom Regulatory Authority of India (TRAI) had abolished ADC , a levy paid by privatetelecom operators to Bharat Sanchar Nigam Limited (BSNL) for meeting the cost of unprofitable operations in ruralareas with effect from April 1, 2008.The ADC component on the international incoming calls was fixed at a reduced rateof Rs. 0.50 per minute for the period from April 1, 2008 to September 30, 2008 after which this component of ADC wasalso eliminated.Now all domestic and international calls are free from the incidence of ADC.
BSNL challenged this ADC amendment before the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) forthe financial years 2006-07, 2007-08 and 2008-09.TheTDSAT has dismissed all the appeals.
The TRAI amended Telecommunication Interconnection Usage Charges Regulation, 2003 vide TelecommunicationInterconnection Usage Charges (Tenth Amendment) Regulations, 2009 which effective April 1, 2009 reducedtermination charge for all types of domestic calls viz fixed to fixed, fixed to mobile, mobile to fixed and mobile to mobile to20 paise per minute from 30 paise per minute, and increased termination charge for incoming international calls to 40paise per minute from 30 paise per minute.This change has been challenged by many operators before theTDSAT.
Mobile Number Portability (MNP) is a service that allows end-users of telecommunication services to retain theircurrent mobile telephone number when the subscriber switches from one operator to another. The Department ofTelecommunications (DoT), in November 2007, accepted TRAI's recommendations of March 2006, on Mobile NumberPortability.
DoT has divided the country into two MNP Service Zones and has signed licence agreements with two companies toset-up and operate MNP.According to DoT, MNP is expected to be launched in major cities by September 2009.
DoT had issued on October 19, 2007, a press release permitting the use of alternate wireless technologies by UASLicensees. UAS Licensees who were using CDMA Technology for wireless access are now permitted to use GSMtechnology and vice-versa. In August 2008, Hon'ble Delhi High Court upheld the Government decision. On March 31,2009,TDSAT dismissed a petition filed by Cellular Operators Association of India and other GSM Operators against theGovernment's decision to allow dual technology. TDSAT also directed the DoT to immediately review the subscriberbase of BSNL & Mahanagar Telephone Nigam Limited (MTNL) in all the circles and withdraw the spectrum that is
Regulatory Developments
Access Deficit Charges
Telecommunication Interconnection Usage Charges Regulation,2003
Mobile Number Portability
Use of AlternateTechnology
·
·
·
·
Access Deficit Charges ( )
&
23
beyond the criteria laid down by the DoT. The Hon'ble Supreme Court has stayed such requirement to surrender thespectrum.
DoT on December 12, 200 Information Memorandum which interalia provides information onbidding by way of e-auction for 2.1 GHz Third Generation (3G) Spectrum which is used by GSM operators for 3GServices like HSPA/WCDMA. The Memorandum also offers for bidding BWA spectrum for WiMax. 3G spectrumauction was postponed twice by DoT.No time-line for conducting the process has been finalised.
Based on TRAI recommendations (which discriminate between GSM and CDMA operators by allotting spectrumin a 2:1 ratio based on unsubstantiated presumption that CDMA technology is significantly more spectrumefficient), DoT issued fresh spectrum allocation guidelines in January 2008, increasing substantially thesubscriber number thresholds, making it more difficult for established service providers to acquire more spectrumand improve their quality of service to subscribers. DoT has set up a committee to review allocation criteria.TDSAT, in a recent judgment has held that TRAI recommendations were done in a non-transparent manner andhas advised DoT to issue fresh guidelines after getting the committee report.
The rapid pace of technological development in the telecom hardware and software sectors has made it possible for theCompany to provide a variety of services to its subscribers in a spectrum-efficient and cost-efficient manner.
The year witnessed the introduction of some value added services, which are expected to deliver a growing part of theCompany's revenues in the years ahead.The Company proposes to launch exciting new services and features on its networkin the near future, as a part of its endeavour to achieve Customer Delight. While the Company would aggressively focus ondata cards, fixed wireless and mobile telecom services, it will also refocus its attention on wireline services.
The year witnessed the launch of new Value Added Services (VAS) under Brand Tata Indicom. Revenues from VAS areexpected to bolster the Company's revenues significantly in the coming years.The Company will also realign its focus on thewireline services along with the focus on the wireless offerings.
The Company andTataTeleservices Limited (TTSL) filed in December 2007, a petition beforeTDSAT:
- challenging allocation of spectrum beyond the contracted amount to GSM operators;
- querying the pricing of spectrum beyond the contracted amount and recommending, if necessary, withdrawal ofexcess spectrum allocated to GSM operators;
- seeking release of the 3 and 4 CDMA carriers (within the contracted amount of 5+5 MH ) against its pendingapplications;
- seeking upfront allotment of the contracted 5+5 MHz spectrum to CDMA operators, as was done in the case ofGSM operators;and
- demanding technology neutrality.
DoT assured TDSAT that spectrum would be allocated against the pending applications. However, without allocatingspectrum against pending applications, DoT enhanced substantially the subscriber number requirement in January2008.The petition is likely to be heard soon.
The Company, after holding discussions with TRAI, launched in November 2004, the innovative Push-To-Talk (PTT)service on a non-chargeable basis.PTT enables subscribers to form groups and instantly connect with multiple personsacross the country who require short bursts of information, thus increasing productivity and efficiency whilesimultaneously reducing costs. Commencing January 2005, DoT and TRAI sought some information, which wasfurnished, after which they directed the Company in February 2005, to discontinue the service which was done. DoTthereafter levied a penalty of Rs. 50 crores on the Company in February 2006, for alleged violation of ISP licenseconditions; this was challenged by the Company at theTDSAT, and pending hearing, the demand has been stayed.
·
·
·
Spectrum
Spectrum
Push toTalk
(a) Allocation of 3G Spectrum
(b) Guidelines for allocation of additional Spectrum
OPPORTUNITIES ANDTHREATS
Information on important litigation concerning the Company is as under:
rd thz
8 released an
24
th14 Annual Report 2008-2009
·
·
Computation of Licence Fee
Fulfillment of Roll-out Obligations
TDSAT in its judgement of July 2006, had laid down the principle that revenues accruing from non-licensed activitiesshould not attract licence fee and directed TRAI to prepare a list of items to be included and excluded from AdjustedGross Revenue (AGR) which attracts licence fee.
The matter was decided in 2007 by TDSAT, which based on TRAI recommendations identified various items to beexcluded from AGR.The order would be effective from the date of filing of petitions inTDSAT. DoT has filed an appeal inthe Hon'ble Supreme Court challenging the whole order while the Company and TTSL have filed an appeal seekingimplementation of the order from the first demand for the year 1999-00, raised by DoT in May 2003.
As a UAS Licensee, the Company was required to complete certain rollout obligations within 1 and 3 years from theeffective date of its license(s). The coverage had to be certified by the Telecommunication Engineering Center (TEC).Due to reasons not in the control of any of the UASL operators, the first year norms could not be met by any of them.
Despite various representations from the industry and the Company, DoT on June 4, 2007, issued show cause noticesto the Company and other operators alleging non-fulfillment of the stipulated rollout obligations at the end of the firstyear. The notices required the Company to explain to DoT, why liquidated damages of Rs. 14 crores (i.e. Rs. 7 croreseach for Mumbai and Maharashtra circle) should not be recovered from the Company for the alleged failure. TheCompany has replied to the notices.The Company has received legal opinion that the demands are invalid under law.
The Company is in the business of providing the entire range of telephony products in Mumbai Service Area and Maharashtra(including Goa) Service Area.
The Company expanded its network throughout the States of Maharashtra and Goa by covering 1,148 towns by the end ofthe financial year 2008-09.Details of various products and services are provided in the Directors' Report.
The outlook for the Company appears bright on a long-term basis. The Company will also benefit from its association withTTSL, which has licences to provide telecom services in 20 circles across India.TTSL also has been permitted by the DoT touse GSM Technology in 17 Circles, and has got allocation of GSM spectrum in 16 circles.The national teledensity is aroundthe 37% mark, and considering the teledensity of other regions and countries in Asia, there is a vast market in our countrywaiting to be tapped and the Company will take all the necessary initiatives to become a major player in its chosen areas ofoperation.The Company has expanded its coverage to 1,148 towns as at March 31, 2009.
As is the case with any infrastructure project, the Company is exposed to a number of risks. Key risks include:
The Indian telecommunications industry is subject to extensive Government regulation, especially as regards allocation ofspectrum and introduction of new services. However, the industry is being liberalised and the Company would endeavour totake advantage of the new opportunities afforded by regulatory changes, such as use of cross over technology, newplatforms and the proposed introduction of 3G services, which could allow the Company to provide all types of high speedcommunication and convergence services.
The Company's telecommunications licenses, provide broad discretion to the Government to influence the conduct of theCompany's businesses by giving it the right to modify, at any time, the terms and conditions of the licenses and take over theentire services, equipment and networks or terminate or suspend the licenses, if necessary or expedient, in the publicinterest or in the interest of national security or in the event of a national emergency, war or similar situation.
The Company's licenses are for fixed periods and are renewable for additional terms at the discretion of the Government.There can be no assurance that any of the Company's licenses will be renewed at all or renewed on the same or better terms.
Changes in technology may render the Company's current technologies obsolete or require it to make substantial capitalinvestments for upgradation. The telecommunications industry has seen rapid changes in technology. Although theCompany strives to keep its technology up to date in accordance with the latest international technological standards, thetechnology currently employed by it may become obsolete or subject to competition from new technologies in the future.
SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE
OUTLOOK
RISKS AND CONCERNS
Regulatory Risks
Technological Risks
25
Financing Risks
Interconnection Risks
Competition Risks
Dependency on Tata Teleservices Limited
Tata Indicom
The Company is a telecommunication service provider and requires significant funding on an ongoing basis for setting upand expanding telecom infrastructure including services to be offered using GSM technology.Besides, the Company will alsobid for 3G license.Half of the project cost is funded by way of debt that is subject to a number of terms and conditions includingperiodic review of the business plan. Implementation of project would be materially affected if the company does not achievefinancial closure for project cost in a timely manner.
For calls which originate or terminate outside the Company's network, its ability to provide telecommunications services isdependent on access to and the development, quality and maintenance of the competitors' networks, and their willingness toco-operate with the Company in interconnection arrangements. If for any reason these interconnection arrangements aredisrupted, or if grant of Point of Interconnections (PoIs) or their augmentation are delayed, one or more of the Company'sservices may be delayed, interrupted or stopped leading to customer complaints, dissatisfaction and churn.
The Indian telecommunications industry has recently witnessed intense competition with the entry of 4-5 new operatorsleading to further fall in tariffs. The operations of the Company are restricted to two telecom circles and thus it has someoperational disadvantages vis-à-vis national operators. To match the competitors, the Company has to provide subsidy onhandsets sold by its distributors to prospective customers.
The Company has closely aligned and integrated its business operations and strategies with those of TTSL and also sharescertain infrastructure (e.g. billing platform, intelligent network platform etc.) and activities (e.g. procurement) with TTSL. TheCompany benefits from the goodwill associated with the brand that Tata Sons Limited has permitted theCompany to use for marketing its products and services.The Company's Central Services sharing arrangements with TTSLallow it to jointly negotiate with equipment suppliers and service providers and benefit from economies of scale. In addition,the Company offers roaming services to its CDMA mobile subscribers, who can roam in the Service Areas where the TTSLnetwork is operational and vice versa. Although all the above positively impact the Company's performance, if the Companyis viewed as a stand alone enterprise, this inter-dependency may be perceived to be an area of concern.
An Audit Committee of the Board of Directors has been constituted as per the provisions of Section 292A of the CompaniesAct, 1956 and Corporate Governance requirements specified by the stock exchanges.
The internal audit function is looked after by an independent firm, which conducts reviews and evaluation and presents itsreports to the Audit Committee and the management at regular intervals.
The Internal Auditors’ Reports dealing with internal control systems are considered by the Audit Committee and appropriateactions are taken, wherever necessary.
The financial statements have been prepared in accordance with the requirements of the Companies Act, 1956, the IndianGenerally Accepted Accounting Principles (Indian GAAP) and the Accounting Standards as prescribed by the Institute ofChartered Accountants of India.
The Board of Directors believes that it has been objective and prudent in making estimates and judgements relating to thefinancial statements and confirms that these financial statements are a true and fair presentation of the Company'soperations and loss for the year.
The entry of new service providers has substantially increased competition in the market Increase in choices mean moreeffort and higher decibel volumes in acquiring and retaining subscribers which in turn makes it imperative to retain valuableand skilled intellectual capital.The offer of higher monetary compensation by other operators and other service sectors likeretail and media have also increased the challenges of retention. The initiatives undertaken by the Company have beendescribed in the Directors Report.The Company had 1,726 employees on its rolls as on March 31, 2009.
INTERNAL CONTROL SYSTEMS ANDTHEIR ADEQUACY
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
DEVELOPMENTS ON HUMAN RESOURCES FRONT
.
’
26
th14 Annual Report 2008-2009
KEY FINANCIAL INFORMATION & OPERATIONAL PERFORMANCE
Revenues from Telecommunication Services
Other Income
Earnings Before Interest, Taxation, Depreciation, andAmortisation (EBITDA)
Expenses
During the year, revenues from telecommunicationservices increased to Rs. 1,941.68 crores (previousyear Rs. 1,707.19 crores). This revenue growth waslargely driven by the 48% increase in the number ofsubscribers to 74 lakhs at the end of March 2009(compared to 50.79 lakhs subscriber lines as at theend of March 2008).The revenue growth is based onthe growth in subscriber base, amidst falling tariffs.The tariffs of prepaid, postpaid and fixed linesegments have been reduced to match reductionsundertaken by competitors.
Other income increased to Rs. 112.28 crores (previous year Rs. 82.41 crores), which includes subsidies received from theUniversal Service Obligation Fund towards provision of Rural Household Direct Exchange lines (RDELs) in specified ShortDistance Charging Areas (SDCAs) amounting to Rs.92.94 crores (previous year Rs.56.81 crores).
During the year, EBIDTA increased by 22% fromRs.485.55 crores to Rs. 593.18 crores primarily dueto increase in revenues by 15% and increase insubscribers by 48%.
The major expenses as a percentage of total cost is as follows:
27
Revenue (in crores)
807.47
1,095.13
1,406.98
1,707.19
1,941.68
-
500.00
1,000.00
1,500.00
2,000.00
2004-05 2005-06 2006-07 2007-08 2008-09
EBITDA (in crores)
(66.12)
124.71
302.60
485.55
593.18
(200.00)
-
200.00
400.00
600.00
2004-05 2005-06 2006-07 2007-08 2008-09
E percentage of total costxpenses as a
Employees Cost
5%Administration and
other Expenses
10%
Marketing and
Business Promotion
Expenses
13%
Depreciation
20%
Interest
14%
Network Cost
16%
Interconnect and
other access costs
22%
Net Loss
Fixed Assets
DECLARATION REGARDING COMPLIANCE BY BOARD MEMBERS AND SENIOR MANAGEMENT PERSONNELWITHTHE COMPANY’S CODE OF CONDUCT
Dr. Mukund Rajan
The Company's net loss increased to Rs. 159.60 crores for the year (previous year Rs. 125.74 crores). The Companylaunched its full mobility services only in second half of 2003-04, and it is not uncommon for large greenfield infrastructuretelecom projects to incur losses during the initial few years of project implementation.
The Company continues to grow its network in Mumbai and other cities in Maharashtra and Goa.The year-end Gross Blockincreased by Rs.27.92 crores (Net of Passive Infra Hive Off - Rs.355.18 crores, Network Interface Unit (NIU) decapitalisation- Rs. 368.58 crores, AS-11 transitional adjustment - Rs. 19.87 crores and other deletions - Rs. 3.91 crores) to Rs. 4,552.63crores (previous year Rs.4,524.71 crores).The major increase in the Gross Block was on account of expansion of the CDMAnetwork by installation of switches, cell sites and backbone amounting to Rs. 752.37 crores.The Gross Block also includesthe cost of GSM license fee (Rs. 392.66 crores). During the previous year, TDMA assets were retired and removed fromGross Block (Rs. 596.94 crores) and held for sale at the estimated realizable value of Rs. 2.30 crores, of which during thecurrent year, the Company has written off assets aggregating to Rs.1.20 crores being not realizable.
The year-end Net Block has increased from Rs.2,861.13 crores to Rs.2,899.08 crores.Year-end Capital Work-in-Progress isat Rs.218.07 crores (previous year Rs.125 crores).
This is to confirm that the Company has adopted a Code of Conduct for its employees including the Managing Director. Inaddition, the Company has adopted a Code of Conduct for its Non-Executive Directors.Both these codes are available on theCompany’s website.
I confirm that the Company has in respect of the financial year ended March 31, 2009, received from the Senior ManagementTeam of the Company and the Members of the Board, a declaration of compliance with the Code of Conduct as applicable tothem.
For the purpose of this declaration, Senior Management Team means the Chief Financial Officer, employees in the GeneralManager cadre and above, and the Company Secretary as on March 31, 2009.
Managing Director
Mumbai, May 11, 2009
th14 Annual Report 2008-2009
28
AUDITORS’ REPORT
TO THE MEMBERS OF TATATELESERVICES (MAHARASHTRA) LIMITED
1. We have audited the attached Balance sheet of as at 31 March 2009, theProfit and Loss Account and the Cash Flow Statement for the year ended on that date, annexed thereto.These financialstatements are the responsibility of the Company's management. Our responsibility is to express an opinion on thesefinancial statements based on our audit.
2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial statements arefree of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements. An audit also includes assessing the accounting principles used and significantestimates made by management, as well as evaluating the overall financial statement presentation.We believe that ouraudit provides a reasonable basis for our opinion.
3. As required by Companies (Auditor's Report) Order, 2003 issued by the Central Government in terms of sub-section(4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure, a statement on the matters specified inparagraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to above, we report that:
a) We have obtained all the information and explanations, which to the best of our knowledge and belief werenecessary for the purposes of our audit;
b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears fromour examination of the books;
c) The Balance sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreementwith the books of account;
d) In our opinion, the Balance sheet, Profit and Loss Account and Cash Flow Statement dealt with by this reportcomply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;
e) On the basis of written representations received from the directors as on March , 2009 and taken on record bythe Board of Directors, we report that none of the directors is disqualified as on from beingappointed as a director in terms of clause (g) of sub- section (1) of section 274 of the Companies Act, 1956.
f) In our opinion and to the best of our information, and according to the explanations given to us, the said accountsread with the Significant Accounting Policies and notes thereon, give the information required by the CompaniesAct, 1956, in the manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
in case of the Balance sheet, of the state of affairs of the Company as at ;
ii) in case of the Profit and Loss Account, of the loss for the year ended on that date;and
in case of the Cash Flow Statement, of the cash flows for the year ended on that date.
ForChartered Accountants
y 11, 2009 Membership No. 46488
TataTeleservices (Maharashtra) Limited
Deloitte Haskins & Sells
A B Jani
st
31March 31, 2009
i) March31, 2009
iii)
PartnerMumbai, Dated:Ma
29
ANNEXURE TO THE AUDITORS’ REPORT
Re: Tata Teleservices (Maharashtra) Limited
(Referred to in Paragraph 3 of our report of even date)
i) The nature of the Company's activities are such that clauses (xiii) and (xiv) of paragraph 4 of the Companies (Auditors’Report) Order, 2003 are not applicable to the Company for the year.
ii) In respect of its fixed assets
(a) The Company has maintained proper records showing full particulars, including quantitative details and situationof fixed assets.
(b) All fixed assets have not been physically verified by the management during the year but there is a regular programof verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of itsassets.No material discrepancies were noticed on such verification.
(c) The Company, during the year, transferred certain fixed assets relating to its Passive infrastructure business.According to the information and explanations given to us, we are of the opinion that the sale of the said fixedassets although substantial has not affected the going concern status of the Company (Refer note 25 of Schedule17).
iii) In respect of its inventories:
(a) The stocks of trading goods have been physically verified during the year by the management. In our opinion,the frequency of verification is reasonable.
(b) The procedures of physical verification of stocks followed by the management are reasonable and adequate inrelation to the size of the Company and the nature of its business.
(c) The Company has maintained proper records of its inventories and no material discrepancies were noticed onphysical verification.
iv) The Company has not granted or taken any loans, secured or unsecured from companies, firms or other partiescovered in the register maintained under Section 301 of the Companies Act, 1956 and accordingly the sub-clauses (a)to (g) of clause (iii) of the Order are not applicable to the Company.
v) In our opinion, and according to the information and explanations given to us, there is an adequate internal controlsystem commensurate with the size of the Company and nature of its business with regard to purchase of inventory andfixed assets and sale of goods and services.During the course of our audit we have not observed any continuing failureto correct major weaknesses in the internal control system.
vi) a) According to the information and explanations given to us, we are of the opinion that the particulars ofcontracts/arrangements that are needed to be entered into the register maintained under section 301 of theCompanies Act, 1956 have been so entered.
b) According to the information and explanations given to us, where such transactions are in excess of Rs. 5 lakhs inrespect of any party, the transactions have been made at prices which are, prima facie, reasonable having regardto the prevailing market price/ similar transactions with other parties at the relevant time.
vii) The Company has not accepted any deposits from the public.
viii) In our opinion, the Company has an internal audit system commensurate with the size of the Company and the nature ofits business.
ix) We have broadly reviewed the books of account and records maintained by the Company relating to telecommunicationactivities pursuant to the order made by the Central Government for maintenance of cost records under clause (d) ofsub-section (1) of Section 209 of the Act and are of the opinion that prima facie the prescribed accounts and recordshave been made and maintained. We have, however, not made a detailed examination of the records with a view todetermining whether they are accurate or complete.
x) According to information and explanations given to us in respect of statutory and other dues:
(a) The Company has generally been regular in depositing undisputed statutory dues in respect of Provident Fund,Employees' State Insurance, Income-tax, Sales-tax, Wealth tax, Service tax, Custom duty, cess and any othermaterial statutory dues with the appropriate authorities during the year.
30
th14 Annual Report 2008-2009
(b) According to information and explanation given to us details of disputed Sales tax / Income-tax / Customs duty /wealth tax / Service tax/ Excise Duty and Cess, which have not been deposited as at March 31, 2009, on accountof disputes are given below:
xi) In our opinion, and according to the information and explanations given to us, the accumulated losses of the Company,at the end of the financial year are more than fifty percent of its net worth.The Company has not incurred cash lossesduring the financial year under audit and in the immediately preceding financial year.
xii) In our opinion and according to information and explanations given to us, the Company has not defaulted in repaymentof dues payable to a financial institutions and banks.
xiii) According to the information and explanations given to us, the Company has not granted any loans or advances on thebasis of security by way of pledge of shares, debentures and other securities.
xiv) According to the information and explanations given to us, the terms and conditions of the guarantees given by theCompany for loans taken by others from banks or financial institutions, are not prima facie prejudicial to the interests ofthe Company.
xv) According to the information and explanations given to us, the term loans availed by the Company were, prima facie,applied during the year for the purpose for which the loans were obtained, other than temporary deployment pendingapplication.
xvi) According to information and explanations given to us and on an overall examination of the balance sheet of theCompany, funds raised on short term basis have, prima facie, been used for long term investment to the extent ofRs.1,909.70 crores.
xvii) According to information and explanations given to us, the Company has not made any preferential allotment of sharesto parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956.
xviii) The Company has not issued any debentures during the year.
xix) The Company has not raised any money by way of public issues during the year.
xx) According to the information and explanations given to us, no fraud on or by the Company was noticed or reportedduring the year.
ForChartered Accountants
PartnerMumbai, Dated:May 11, 2009 Membership No. 46488
Deloitte Haskins & Sells
A B Jani
31
Name of statute Nature of Amount Period to which Forum where dispute
the dues (Rs. in Crores) the amount relates
The Income-tax Act, 1961 Income tax 0.08 A.Y. 1998-99 Income Tax Apellate Tribunaldemand
is pending
32
As at As at
March 31, 2009 March 31, 2008
Rs. in Crores Rs. in Crores
SOURCES OF FUNDS
Shareholders' Funds
Share Capital 1 1,897.19 1,893.56
Reserves and Surplus 2 583.16 576.17
2,480.35 2,469.73
Loan Funds
Secured Loans 3 2,036.13 2,098.09
Unsecured Loans 4 1,076.16 528.78
3,112.29 2,626.87
Total 5,592.64 5,096.60
APPLICATION OF FUNDS
Fixed Assets 5
Gross Block (at cost) 4,552.63 4,524.71
Less : Accumulated Depreciation 1,653.55 1,663.58
Net Block 2,899.08 2,861.13
Capital Work - In - Progress 218.07 125.00
3,117.15 2,986.13
Investments 6 75.00 -
Current Assets, Loans and Advances
Cash and Bank Balances 7 27.48 34.46
Sundry Debtors 8 240.73 201.48
Inventories 9 2.01 2.22
Loans and Advances 10 299.91 216.99
570.13 455.15
Less : Current Liabilities and Provisions
Current Liabilities 11 981.61 981.91
Provisions 12 36.71 33.09
1,018.32 1,015.00
Net Current Liabilities (448.19) (559.85)
Profit and Loss Account 2,848.68 2,670.32
Total 5,592.64 5,096.60
Significant Accounting Policies and Notes to Financial Statements 17
As per our attached report of even dateFor Deloitte Haskins & Sells For and on behalf of the BoardChartered Accountants
(Chief Legal Officer and
A.B.Jani Dr. Mukund RajanPartner (Chairman) (Managing Director)
S. Venkatesan Madhav J. Joshi(Chief Financial Officer)
Company Secretary)
Place: Mumbai Place: MumbaiDate: May 11, 2009 Date: May 11, 2009
Schedule
BALANCE SHEET AS AT MARCH 31, 2009
th14 Annual Report 2008-2009
Kishor A. Chaukar
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 20092008-09 2007-08
Rs. in Crores Rs. in Crores
Income
Telecommunication Services 13 1,941.68 1,707.19
Other Income 14 112.28 82.41
Total 2,053.96 1,789.60
Expenditure
Operation and Other Expenses 15 1,460.78 1,304.05
Profit before Finance and Treasury charges, 593.18 485.55
Depreciation and Tax
Finance and Treasury Charges (Net) 16 304.78 171.01
Depreciation /Amortisation. (Refer Note c of Schedule 5) 446.79 439.35
Loss before tax (158.39) (124.81)
Provision for Tax
- Fringe Benefits Tax 1.21 0.93
Loss after tax (159.60) (125.74)
Balance brought forward (2,670.32) (2,544.58)
Add: Adjustment on account of notification on transitional
provision of Accounting Standard 11 (Refer Note 27 of Schedule 17) (18.76) -
(2,689.08) (2,544.58)
Balance carried to Balance Sheet (2,848.68) (2,670.32)
Earnings Per Share - Basic (Rs.) (0.84) (0.68)
Earnings Per Share - Diluted (Rs.) (0.84) (0.70)
( Refer Note 17 of Schedule 17)
Par Value (Rs.) 10.00 10.00
Significant Accounting Policies and Notes to Financial Statements 17
As per our attached report of even dateFor Deloitte Haskins & Sells For and on behalf of the BoardChartered Accountants
A.B.Jani Dr. Mukund RajanPartner ( )Chairman (Managing Director)
S. Venkatesan Madhav J. Joshi(Chief Financial Officer) (Chief Legal Officer and
Company Secretary)
Place: Mumbai Place: MumbaiDate: May 11, 2009 Date: May 11, 2009
Schedule
33
Kishor A. Chaukar
SCHEDULES FORMING PART OF THE BALANCE SHEET AS AT MARCH 31, 2009
th14 Annual Report 2008-2009
As at As at
March 31, 2009 March 31, 2008
Rs. in Crores Rs. in Crores
SCHEDULE - 1
SHARE CAPITAL
Authorised:
2,500,000,000 Equity Shares of Rs.10/- each 2,500.00 2,500.00
2,500.00 2,500.00
Issued and Subscribed:
1,897,190,504 (Previous year 1,893,563,718) Equity Shares of 1,897.19 1,893.56
Rs.10/- each fully paid-up
1,897.19 1,893.56
Notes:
1.
2.
SCHEDULE - 2
RESERVES AND SURPLUS
Securities Premium account:
Balance at the beginning of the year 576.17 413.87
Add: On conversion of Foreign Currency Convertible Bonds 6.99 162.30
Balance at the end of the year 583.16 576.17
SCHEDULE - 3
SECURED LOANS
From Banks (Refer note 1 below)
Term Loans 1,423.68 1,636.90
Cash Credit Accounts 47.87 110.22
Acceptances 564.57 350.95
2,036.12 2,098.07
Deferred payment credits (Refer note 2 below) 0.01 0.02
2,036.13 2,098.09
Of the above 1,245,259,393 Equity Shares are held up by Tata Sons Limited (the ultimate Holding Company) and
its Subsidiaries.
Of the above 3,626,786 (Previous Year 84,048,942) Equity Shares are issued during the year on conversion of
Foreign Currency Convertible Bonds.
34
SCHEDULES FORMING PART OF THE BALANCE SHEET AS AT MARCH 31, 2009
Notes :
1.
- by first pari pasu charge on the movable and/or immovable assets of the company,
- by pledge of shares of promoters,
- by assignment of the proceeds on sale of network in the event of cancellation of the telecom license,
- by assignment of telecom license,
- by assignment of insurance policies,
- by hypothecation of present and future book debts and outstanding money receivable,
2. Secured by hypothecation of vehicles acquired out of the loans.
SCHEDULE - 4
UNSECURED LOANS
Foreign Currency Convertible Bonds (FCCB) 67.16 61.12
(Refer note below)
From Banks
- Short Term Loans 1,009.00 467.66
1,076.16 528.78
Note:
Loans from Banks are secured by either one or more of the following as per terms of the arrangements with
respective banks:
During the year ended March 31, 2005, the Company issued FCCB of USD 125 millions at an interest rate of 1% per
annum (payable semi-annually). The holders of these Bonds have an option to convert the Bonds into Equity Shares of
the Company on or after July 1, 2004 at a pre-determined price of Rs.24.96 per Equity Share. Subsequent to the rights
issue of Equity Shares, the conversion price has been adjusted to Rs.24.49 per Equity Share.The Bonds that are not
converted into Equity Shares, are redeemable at a premium of 19.38% at the end of 5 years from the date of issue.
35
th14 Annual Report 2008-2009
36
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SCHEDULES FORMING PART OF THE BALANCE SHEET AS AT MARCH 31, 2009As at As at
March 31, 2009 March 31, 2008
Rs. in Crores Rs. in Crores
SCHEDULE - 6
INVESTMENT (Refer Note 25 of Schedule 17)
Long- term Investment (Unquoted) (at cost)
Non - Trade:
In Subsidiary Company:
75,000,000 Equity Shares (Previous Year NIL) of 21st Century Infra 75.00 -
Tele Limitied of Rs 10/- each fully paid-up
75.00 -
SCHEDULE - 7
CASH AND BANK BALANCES
Cash on hand 0.02 0.03
Balance with Scheduled Banks in
- Current Accounts 27.40 34.42
- Cash Credit Accounts (Refer Note 1 of Schedule 3) 0.06 -
- Term Deposit Accounts - 0.01
27.48 34.46
SCHEDULE - 8
SUNDRY DEBTORS
(Unsecured)
Outstanding for a period exceeding six months 276.45 256.46
Others 225.12 185.52
501.57 441.98
Less: Provision 260.84 240.50
240.73 201.48
Note:
Considered good 240.73 201.48
Considered Doubtful 260.84 240.50
SCHEDULE - 9
INVENTORY
Traded Goods
Starter Kits 2.01 2.22
2.01 2.22
37
SCHEDULES FORMING PART OF THE BALANCE SHEET AS AT MARCH 31, 2009
th14 Annual Report 2008-2009
As at As at
March 31, 2009 March 31, 2008
Rs. in Crores Rs. in Crores
SCHEDULE - 10
LOANS AND ADVANCES
(Unsecured)
Advances recoverable in cash or in kind or for value to be received 250.59 194.60
[Includes Rs 0.18 Crores (Previous year Rs. 0.18 Crores) due from an officer
of the Company. Maximum amount outstanding at any time during the year is
Rs.0.18 Crores (Previous year Rs. 0.18 Crores)]
Premises and other deposits 34.50 19.42
Advances to Subsidiary 11.89 -
Assets retired from active use awaiting Disposal (Refer Note 21 of Schedule 17) 0.56 2.30
Advance Tax paid (Tax Deducted at Source) 4.99 3.29
302.53 219.61
Less : Provision 2.62 2.62
299.91 216.99
Note :
Considered good 299.91 216.99
Considered doubtful 2.62 2.62
SCHEDULE - 11
Current Liabilities
Sundry Creditors (Refer Note 24 of Schedule 17)
Total Outstanding dues of Micro Enterprises and Small Enterprises - -
Total Outstanding dues of Creditors other than Micro Enterprises and Small Enterprises:
- Under Usance Letter of Credit 136.33 52.68
- Others 711.40 791.99
847.73 844.67
Deposits from Customers and others 73.66 70.71
Interest accrued but not due on loans 4.97 7.01
Other liabilities 55.25 59.52
981.61 981.91
Note: Other Liabilites include temporary overdrawn bank balances aggregating to Rs.10.74 Crores (Previous year
Rs.11.62 Crores)
38
SCHEDULE - 12
Provisions
For Contingencies 16.74 16.74
For Retirement benefits 5.27 3.06
For Premium on Redemption of FCCB 14.55 13.24
For Fringe Benefits Tax (net of advances) 0.15 0.05
36.71 33.09
Note: Provision for contingencies relate to certain claims by vendors on the Company made in earlier years and there is
no movement in the same during the year.
SCHEDULES FORMING PART OFMARCH 31, 2009
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED
2008-09 2007-08
Rs. in Crores Rs. in Crores
SCHEDULE - 13
TELECOMMUNICATION SERVICES
Telephony 1,679.95 1,510.87
Internet Services 48.81 29.88
Interconnection Usage Charges [including in respect of earlier years 194.14 153.04
Rs.5.46 Crores (Previous year Nil)]
Sale of Traded Goods 18.78 13.40
1,941.68 1,707.19
SCHEDULE - 14
OTHER INCOME
Subsidies from Department of Telecommunications (DoT) (Refer Note 26 of schedule 17) 92.94 56.81
Excess provision / Sundry credit balances in respect of earlier years written back 8.21 12.93
Infrastructure Sharing 4.28 9.10
Profit on transfer of the "Passive Infrastructure Business" to wholly 0.07 -
owned subsidiary (Refer Note 25 of schedule 17)
Gain on Fixed assets sold/written off (Net) - 1.79
Sale of Refurbished Network Interface Unit's 2.91 -
Miscellaneous Receipts 3.87 1.78
112.28 82.41
SCHEDULE - 15
OPERATION AND OTHER EXPENSES
Network Operation costs
Revenue Share to DoT 171.34 156.06
Repairs and Maintenance - Plant and Machinery [including capital inventory 59.50 39.60
consumed Rs 15.71 Crores (Previous Year Rs.4.45 Crores)]
Power 58.78 52.27
Rent 17.26 14.22
Rates and taxes 6.01 8.83
Insurance 1.02 0.91
Infrastructure Sharing Cost 40.82 5.22
Miscellaneous 9.21 10.87
363.94 287.98
Interconnection and Other access costs [including in respect of earlier
years Rs.5.98 Crores (Previous year Nil)] 474.64 436.57
Payments to and Provisions for Employees
Salaries and Bonus [Net of excess provision for earlier year written 98.68 83.91
back Rs. 5.80 Crores]
Contribution to Provident and other Funds 5.62 4.98
Staff Welfare 8.60 4.74
112.90 93.63
39
SCHEDULES FORMING PART OFMARCH 31, 2009
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED
th14 Annual Report 2008-2009
2008-09 2007-08
Rs. in Crores Rs. in Crores
Administrative and Other expenses
Rent 14.12 15.52
Rates and taxes 5.94 3.50
Repairs and Maintenance - others 6.05 4.63
Travel and conveyance expenses 18.48 9.24
Collection / Credit verification charges 12.58 18.43
Customer service and call centre cost 80.11 61.25
Assets awaiting disposal written off (Refer Note 21 of Schedule 17) 1.20 -
Loss on Fixed assets sold/written off/retired from active use (Net) 0.34 2.34
Provision for Doubtful debts 15.75 16.23
(Net of insurance received amounting to Rs.4.59 Crores (previous year Rs.2.72 Crores))
Insurance Expenses 0.04 0.08
Miscellaneous expenses 55.56 53.92
Contractual and other claims and liabilities (Net) 1.26 (0.99)
211.43 184.15
Marketing and business promotion expenses
Advertisement and business promotion expenses 105.52 64.63
Hand set Subsidy (Net of Rs.7.64 Crores (Previous year Rs.10.74 Crores) 83.74 131.97
incentive received)
Sales Commission and Expenses 99.25 97.32
Traded Goods - Starter Kits
Opening Stock 2.22 2.22
Add: Purchases 9.15 7.80
Less: Closing stock 2.01 2.22
9.36 7.80
297.87 301.72
1,460.78 1,304.05
SCHEDULE - 16
FINANCE AND TREASURY CHARGES (NET)
Interest
On Fixed Term Loans 274.66 166.14
Others 13.29 10.07
Expenses for loan arrangement, bill discounting and bank charges 26.36 14.69
Foreign exchange fluctuations (Net) 36.13 (9.98)
350.44 180.92
Less: Interest Capitalized (Refer Note 23 of schedule17) 45.63 8.63
304.81 172.29
Less: Interest Income on Term Deposits with Banks - 1.21
Profit on redemption of units (Current Investment) 0.03 0.07
304.78 171.01
40
SCHEDULES FORMING PART OF THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNT
SCHEDULE 17
SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO FINANCIAL STATEMENTS
1. Company background
.
2. Significant Accounting Policies
(a) Basis of preparation of financial statements
(b) Use of estimates
(c) Fixed Assets
Tata Teleservices (Maharashtra) Limited (“the Company”), was incorporated on March 13, 1995. The Company islicensed to provide basic and cellular telecommunication services. The Company presently holds two Unified Access(Basic and Cellular) Service Licenses, one for Mumbai Service Area and another for Maharashtra and Goa andprovides telecommunication services using Code Division Multiple Access (CDMA) technology.The Company has alsobeen granted approval by Department of Telecommunications (DoT) for providing telecommunication services usingGlobal System for Mobile Communications (GSM) technology under the aforesaid licenses.The Company has alreadybeen allotted trial Spectrum by DoT for Mumbai, Maharashtra and Goa Service Area The Company also holds theNational Internet Service provider - InternetTelephony license.
The Company is a subsidiary ofTata Sons Limited (the ultimate holding company)
The accounts have been prepared to comply in all material aspects with applicable accounting principles in India,the Accounting Standards (AS) notified in the Companies (Accounting Standards) Rules 2006 and relevantprovisions of the Companies Act, 1956 (the Act).
The preparation of financial statements in conformity with generally accepted accounting principles requiresestimates and assumptions to be made that affect the reported amounts of assets and liabilities and disclosure ofcontingent liabilities on the date of the financial statements and the reported amounts of revenues and expensesduring the reporting year.Differences between actual results and estimates are recognised in the periods in whichthe results are known / materialise.
Fixed assets are stated at their historical cost of acquisition or construction, less accumulateddepreciation/amortisation. Cost includes all costs incurred to bring the assets to their working condition andlocation (Also refer note 27).
Assets retired from active use and held for disposal are stated at lower of net book value or net realisable value.(Refer note 21)
Expenditure related to and incurred during the construction period of switches and cell sites are capitalised as partof the construction cost and allocated to the relevant fixed assets.
Capital inventory comprises switching equipment, field unit cards, and capital stores that are carried under CapitalWork-In-Progress till such time as they are issued for new installation or replacement.
The Company capitalises software and related implementation costs as intangible assets, where it is reasonablyestimated that the software has an enduring useful life.
License fees paid by the Company for acquiring licenses to operate telecommunication / internet telephonyservices are capitalised as intangible assets.
Indefeasible Rights to Use ('IRU') bandwidth capacities by the Company are capitalised as intangible assets.
Assets acquired pursuant to an agreement for exchange of similar assets are recorded at the net book value of theassets given up, with an adjustment for any balancing receipt or payment of cash or any other form ofconsideration.
41
d) Depreciation
Useful Life (in years)
e) Foreign Currency transactions
.
i) Fixed assets are depreciated on a straight line basis, based on the following estimates of their usefuleconomic lives:
Buildings 60
Plant and Machinery
- Network Equipment 12
- Time Division Multiple Access (TDMA) Equipment (Refer note 21) 9
- Outside Plant 18
- Network Interface Units (Refer note 22 ) 5
- Air- Conditioning Equipment 6
- Generators 6
- Electrical Equipments 6
- Computers 3
- Office Equipments 3
- Computer Software 3
Furniture and Fittings 3
Vehicles 5
ii) Leasehold land and premises are amortised uniformly over the period of lease.
iii) Amortization on License fees is provided for uniformly over the original license period of 20 years from thedate of commencement of operation. Since the Company has the intention of being in business for a periodwell beyond 10 years and the telecommunication business cannot be carried on without theTelecom license,the useful life of the asset will exceed the rebuttable presumption of 10 years under AS 26 on “IntangibleAssets”. (Refer note 23)
iv) Indefeasible Right to Use ('IRU') bandwidth capacities taken by the Company are amortised over a period offifteen years based on a technical estimate of useful life of the assets or period of the agreement whichever islower.
v) Depreciation on additions and deletions to assets during the year is charged to revenue pro rata to the periodof their use.
vi) Company provides for obsolescence of its slow moving capital inventory, by way of depreciation, at therate of 33.33% p.a.of cost.
i. Transactions in foreign currency are recorded at the original rates of exchange in force at the timetransactions are effected.
ii. Foreign currency denominated assets and liabilities are reported as follows:
a) Monetary items are translated into rupees at the exchange rates prevailing at the balance sheet date.Non-Monetary items such as fixed assets are carried at their historical rupee values.
b) Gains/losses arising on settlement of foreign currency transactions or restatement of foreign currencydenominated assets and liabilities (monetary items) are recognised in the profit and loss account,except for long term assets/liabilities which pertain to acquisition of fixed assets which are adjusted inthe cost of fixed assets (Refer note 27).
iii. In case of forward exchange covers, the premium or discount arising at the inception of the contract isamortised as expense or income over the life of the contract.
iv. Pursuant to the announcement on accounting for derivatives issued by the Institute of CharteredAccountants of India (ICAI), the Company in accordance with the principle of prudence as enunciated inAccounting Standard 1 on 'Disclosure of Accounting Policies' provides for losses in respect of all outstandingderivative contracts at the Balance Sheet date by marking them to market.Any gains arising on such mark tomarket are not recognized as income (refer note 16 (ii))
The
42
th14 Annual Report 2008-2009
f) Employee benefits
g) Revenue recognition
h) Government Grants
i) Borrowing costs
j) Earnings per share
k) Operating Leases
l) Cash Flow Statement
m) Foreign Currency Convertible Bonds (FCCBs) Expenses
n) Finance andTreasury charges
Retirement benefit costs are expensed to revenue as incurred.
Contributions to the Provident and Superannuation Funds are made in accordance with the rules of the Funds.
The Company participates in a group gratuity cum life assurance scheme administered by the Life InsuranceCorporation (LIC). Provision for the year in respect of gratuity is made on the basis of actuarial valuation as at theend of the year.
Leave encashment is provided for on the basis of actuarial valuation as at the end of the year.
Revenue from telecommunication services is recognised as the service is performed on the basis of actual usageof the Company's network / in accordance with contractual obligations and is recorded net of service tax. Theamount charged to subscribers for specialised features which entitle them to access the network of the Companyand where all other services and products are paid for separately, are recognised as and when such features areactivated.
Revenue is recognised when it is earned and no significant uncertainty exists as to its ultimate realisation orcollection.
Subsidies granted by Government for providing telecom services in rural areas are recognized as income inaccordance with the relevant terms and conditions of the scheme / agreement with DoT.(Refer note 26 below).
Borrowing costs attributable to the acquisition of a qualifying asset, as defined in AS 16 on “Borrowing Costs”, arecapitalised as part of the cost of acquisition.Other borrowing costs are expensed as incurred.
The Company reports basic and diluted earnings per share in accordance with AS 20 on “Earnings Per Share”.Basic earning per share is computed by dividing the net profit or loss for the year by the weighted average numberof Equity shares outstanding during the year. Diluted earnings per share is computed by dividing the net profit orloss for the year by the weighted average number of Equity shares outstanding during the year as adjusted for theeffects of all dilutive potential equity shares, except where the results are anti-dilutive.
Assets taken on Lease under which all significant risks and rewards of ownership are effectively retained by thelessor are classified as Operating Leases.Lease payments under Operating Leases are recognized as expensesas incurred in accordance with the respective Lease Agreements.
The Cash Flow statement is prepared by the indirect method set out in AS 3 on “Cash Flow Statements” andpresents Cash flows by operating, investing and financing activities of the Company.
Premium payable on Redemption of FCCBs is fully provided for on issue of the FCCBs.The Securities PremiumAccount is applied in providing for premium on redemption in accordance with Section 78 of the Act. Onconversion of the FCCBs to Equity Shares the redemption premium is reversed.
Expenses on issue of FCCBs and on Rights issue of Equity Shares are written off to the Securities PremiumAccount in accordance with section 78 of the Act.
Net finance and treasury charges are disclosed in the financial statements. Interest and other income earned fromtreasury operations are reduced from the costs of treasury operations.
43
o) Inventories
p) Fringe BenefitsTax
q) Impairment of assets
r) Investments
s) Contingent Liabilities
As at
March 31,2009
Rs. In Crores
3.
476.03
4. 760.00
5. Contingent liabilities :
97.50
Inventories are valued at lower of cost and net realizable value. Cost of Inventories comprises of all cost ofpurchases and other costs incurred in bringing the inventories to their present location and condition. Cost oftraded goods is determined on weighted average basis.
Fringe Benefits Tax (FBT) is recognized as per the provisions of the Income-tax Act, 1961 and the Guidance Noteon Accounting for Fringe BenefitsTax issued by the ICAI.
An asset is considered as impaired in accordance with AS 28 on “Impairment of Assets”when at the balance sheetdate there are indications of impairment and the carrying amount of the asset, or where applicable the cashgenerating unit to which the asset belongs, exceeds its recoverable amount (i.e. the higher of the asset's netselling price and value in use). In assessing the value in use, the estimated future cash flows expected from thecontinuing use of the asset and from its ultimate disposal are discounted to their present values using a pre-determined discount rate. The carrying amount is reduced to the recoverable amount and the reduction isrecognized as an impairment loss in the profit and loss account.
Current investments are carried at lower of cost and fair value.Long term investments are carried at cost.Provisionis made to recognise a decline other than temporary in the carrying amount of long term investments.
Contingent Liabilities as defined in AS 29 on “Provision, Contingent Liabilities and Contingent Assets” aredisclosed by way of notes to accounts.Provision is made if it becomes probable that an outflow of future economicbenefits will be required for an item previously dealt with as a contingent liability.
Rs. In Crores
Estimated amount of contracts remaining to be executed on capital
account and not provided for (net of advances) 180.74
Counter guarantees given by the Company 720.00
(i) Claims against the company not acknowledged as debt
Telecom Regulatory Matters
(Refer notes below)
Others 83.33
Notes:
Contingent liabilities in respect ofTelecom Regulatory Matters include:
a) The Company had received an Order from the Hon. Supreme Court dismissing the Company's petitionregarding Access Deficit Charge (ADC) demanded by Bharat Sanchar Nigam Limited (BSNL) in respect of'fixed wireless' services provided under the brand name “WALKY”.Demand notices have been received fromBSNL, to pay ADC aggregating to Rs.108.49 Crores for the period 14th November 2004 upto 28th February,2006; the date after which ADC is payable on Net Adjusted Gross Revenue Basis.
Out of the above, the Company, has, in earlier years, already provided for amounts aggregating to Rs.28.14Crores pertaining to ADC for the period from August 26, 2005 upto February 28, 2006. The balance amountsaggregating to Rs. 80.35 Crores have been disclosed as Contingent Liability under 'Telecom RegulatoryMatters' as the Company is of the view that these demands include amounts relating to 'wireline' services
As at
March 31, 2008
142.44405.76
44
th14 Annual Report 2008-2009
and ADC for the period before 26th August, 2005; the actual date after which, as per the directions of theDepartment ofTelecom, services provided under the brand name “WALKY”are to be considered asWirelessin Local Loop (Mobile) for the purposes of ADC.The Company has filed a review petition in this regard and onthe said basis, Telecom Dispute and Settlement Appellate Tribunal (TDSAT) vide its order dated August 12,2008 held that BSNL and the Company should exchange relevant information and reconcile the differences.The Company is awaiting the relevant information from BSNL.The Company is hopeful of success in thematter.
The Company during the year has made on account payment to BSNL of Rs.50 Crores in relation to theabove, which is in addition to Rs.25 Crores paid in earlier years.
b) The Company had received a demand letter dated March 17, 2008 from DoT for Rs.8.38 Crore, being ademand for spectrum charges for the period from April 1, 2005 to February 29, 2008, which was disclosed ascontingent liability as at March 31, 2008.
This demand was subsequently revised to Rs.184.69 Crores by DoT, vide its demand letters dated July 3,2008, for the period from October 1, 1998 to June 30, 2008 which was further increased to Rs.266.00 Croresvide letter dated February 28, 2009. The Company has represented to the Wireless Planning Commission(WPC) various items of differences mentioned in the demand orders, vide letter dated September 24, 2008.Reconciliation of the differences is in progress with theWPC.The Company is expecting a revised order afterthe completion of the reconciliation and is hopeful of success in the matter.
ii) DisputedTax demands in Appeals before relevant authorities:
IncomeTax 0.08
iii) The Company has imported certain capital equipment under “Export promotion of Capital Goods Scheme” of theCentral Government at a concessional rate of Customs Duty. The Company has undertaken export obligation tothe extent of USD 100.8 millions (Rs. 404.41 Crores) [net of USD 65.5 millions (Rs. 262.24 Crores) for which thecompany has applied for exemption] to be fulfilled during a period of 8 years commencing from the 29th January2003, failing which the Company will be liable to pay the differential customs duty, together with interest andpenalties, if imposed.Up-till the end of the year, the Company has fulfilled the export obligation to the extent of Rs.35.53 Crores (previous year Rs.21.22 Crores)
iv) The Company in 2002 had filed a petition beforeTDSAT claiming refund of Rs.50 Crores recovered by DepartmentofTelecommunications (DoT) in 1999 alleging failure to sign basic services license agreement for Karnataka circleafter accepting Letter of Intent (LoI). DoT during the proceedings before TDSAT claimed from the CompanyRs.303 Crores towards loss of (opportunity to earn) license fee and Rs.351 Crores as interest till October 31,2002.TDSAT allowed refund of Rs.50 Crores to the Company with interest of 17% p.a.and dismissed the counter-claim based on a law point (i.e.TDSAT had no jurisdiction) and facts.DoT appealed to the Hon'ble Supreme Courtwhich without commenting on the merits of the counter-claim confirmed that TDSAT had jurisdiction andremanded the matter to TDSAT for fresh adjudication. DoT has filed with TDSAT a counter-claim of Rs.2,015Crores which includes Rs.303 Crores towards loss of (opportunity to earn) license fee and interest of Rs.1,712Crores calculated upto March 31, 2008.The TDSAT vide its order dated September 18, 2008 held that since thecounter claim filed by DoT is in the nature of a recovery suit appropriate court fee needs to be affixed.The matterhas been adjourned for hearing on August 12, 2009.The Company is hopeful of success in the matter.
Counter guarantees have been given by the Company in the ordinary course of business and no liability isexpected to accrue in this respect.
As regards other disputes and claims against the Company, appropriate competent professional advice isavailable to the Company based on which, favorable outcomes are anticipated and no liability is expected toaccrue to the Company.
Rs. in Crores
i) Audit fees 0.18
ii) Tax Audit fees 0.05
iii) Other matters (For Quarterly Audits, certification work etc.) 0.30
iv) Out of pocket expenses [Current year Rs.64,123/- (Previous year Rs.18,844/-)]
0.08
Rs. in Crores
0.18
0.05
0.21
6. Payments to Auditors (excluding service tax) : 2008-09 2007-08
45
7. In November 1999, the Company established the Employee Stock Option Plan (ESOP) under which Equity Shares arereserved for issuance to eligible employees of the Company. In terms of the plan, 1.20 Crores warrants were issued toHughes Tele.com (India) Limited Employees Stock Option Trust, to be held by it on behalf of the Company for awardingeligible employees as and when advised by the Compensation Committee constituted for the purpose. Each allottedwarrant carries with it a right to purchase one Equity Share of the Company at a price of Rs. 10/- per share. Other than2,40,000 fully vested warrants allotted in an earlier year, all allotted warrants vest at the rate of 25% on each successiveanniversary of the grant date, until fully vested. The period during which the vested warrants may be exercised expiresafter 10 years from the date of the vesting.
As at
than five years
The position of the allotted warrants is as follows:
March 31, 2008
(Nos.)
Opening Balance 50,550
Issued during the year -
Forfeited -
Exercised 18,050
Lapsed 24,550
Closing Balance 7,950
Since the market value of the Company's shares on the grant dates did not exceed the exercise price of Rs.10/-, nocompensation expense has been recorded.
The Company is engaged in providingTelecommunication services under Unified Access License.These, in the contextof Accounting Standard 17 on “Segment reporting”, are considered to constitute a single reportable segment.
2007-08
Rs. in Crores
Residential Flats for accommodation of employee 0.02
Cell Sites and others 29.70
Due not later than one year 1.87
Due later than one year and not later 2.60
The agreements are executed for a period ranging from 6 months to 15 years with a renewable clause and in manycases also provide for termination at will by either party giving a prior notice period ranging between 30 to 90 days.
The disclosure as required under AS 15 regarding the Company's gratuity plan is as follows:
As at
March 31,2009
(Nos.)
7,950
-
-
-
-
7,950
8.
9. (a) Operating lease rent expenses for the year in respect of lease agreements entered from April 1,2001.
2008-09
Rs. in Crores
0.82
71.3
(b) Future Minimum Lease Paymentsunder Non-Cancellable Operating Lease :
36.86
123.67
10.
46
Particulars As at March 31, 2009 As at March 31, 2008
Rs. in Crores Rs. in Crores
Projected benefit obligation, beginning of the year 2.27 1.76
Service cost 0.80 0.60
Interest cost 0.24 0.15
Actuarial loss on obligation 0.79 0.21
Benefits paid (0.11) (0.45)
Projected benefit obligation, end of the year 3.99 2.27
th14 Annual Report 2008-2009
11.
12. Value of imports on CIF basis in respect of :
No provision for current income tax has been made in the accounts, since the Company estimates that there will be notaxable profits for the year.DeferredTax charges / credits have not been recognized in view of the tax holiday enjoyed bythe Company and on considerations of prudence as set out in AS 22 on “Accounting forTaxes on Income”.
2008-09
Rs. In Crores
364.39
13. Expenditure in Foreign Currency (Payment basis) on account of : 2008-09
Rs. In Crores
21.86
1.13
22.99
14. Value of Capital Inventory consumed during the year : 2008-09Rs. in Crores %
15.30 97
0.41 03
15.71 100
2007-08
Rs. in Crores
Capital Goods 197.88
2007-08
Rs. in Crores
Interest 21.47
Other 0.41
21.88
2007-08Rs. in Crores %
Indigenous 4.16 94
Imported 0.29 06
4.45 100
47
Actuarial Assumptions:
As at March 31, 2009 As at March 31, 2008
Rs. in Crores Rs. in Crores
Discount rate 7.75% 8.00%
Rate of increase in compensation levels of covered employees 6.50% 6.00%
Rate of Return on Plan Assets 8.00% 8.00%
As at March 31, 2009 As at March 31, 2008
Rs. in Crores Rs. in Crores
Projected benefit obligation, end of the year 3.99 2.27
Fair value of plan assets at the end of the year 2.77 1.38
Net liability recognized in the Balance Sheet. 1.22 0.89
As at March 31, 2009 As at March 31, 2008
Rs. in Crores Rs. in Crores
Fair Value of Plan Assets at the beginning of theyear 1.38 1.34
Expected Return on Plan Assets 0.21 0.11
Contributions 1.28 0.40
Benefit Paid (0.11) (0.45)
Actuarial Gain / (loss) on Plan Assets 0.01 (0.02)
Fair Value of Plan Assets at the end of the year 2.77 1.38
Total Actuarial Loss Recognized (0.78) (0.23)
th14 Annual Report 2008-2009
48
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th14 Annual Report 2008-2009
50
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Oth
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inclu
de C
om
panie
s a
s b
elo
w:
Wirele
ss
TT
Info
Serv
ices L
td.
TH
DC
Ltd
.
Tata
Realty &
Infr
astr
uctu
re L
td.
Tata
AIG
Genera
l In
sura
nce C
o. Ltd
.
Tata
Sky L
td. (f
orm
erly S
pace
TV
Ltd
.)
CM
C L
td.
Tata
Asset M
anagem
ent Ltd
.
Tata
Securities L
td.
Infinity R
eta
il Ltd
.
E-N
XT
Fin
ancia
ls P
vt. L
td.
TC
E C
onsultin
g E
ngin
eers
Ltd
.
Tata
Capital Ltd
.
To
tal
Key M
an
ag
em
en
t
Pers
on
nel
51
15) Related Party disclosures (in terms of Accounting Standard - 18)
ii) Details of all Related Parties and their relationships
66 TRIF Structures & Builders Pvt. Ltd. (W.E.F.31.12.08)
67 TRIF Trivandrum Projects Pvt. Ltd.
68 TRIL Airport Developers Ltd.
69 TRIL Constructions Ltd.
70 TRIL Developers Ltd.
71 APONLINE Limited
72 C-Edge Technologies Limited
73 CMC Americas Inc
74 CMC Limited
75 Custodia De Documentos Interes Limitada
76 Diligenta Limited
77 Financial Network Services (Africa) (Pty) Ltd.
78 Financial Network Services (Beijing) Co. Ltd.
79 Financial Network Services (Europe) plc (Ceased to be a subsidiary
w.e.f. 2.12.2008 )
80 Financial Network Services (H.K.) Limited
81 Financial Network Services Malaysia Sdn Bhd (Under Voluntary Liquidation)
82 MP Online Limited
83 PT Financial Network Services
84 PT Tata Consultancy Services Indonesia
85 Syscrom S.A.
86 Tata America International Corporation
87 Tata Consultancy Services (Africa) (PTY) Ltd.
88 Tata Consultancy Services (China) Co., Ltd.
89 Tata Consultancy Services (Philippines) Inc. (w.e.f. 19.9.2008 )
90 Tata Consultancy Services (South Africa) (PTY) Ltd.
91 Tata Consultancy Services (Thailand) Limited (w.e.f. 12.5.2008 )
92 Tata Consultancy Services Argentina S.A. (formerly TCS Argentina S.A.)
93 Tata Consultancy Services Asia Pacific Pte Ltd.
94 Tata Consultancy Services Belgium SA
95 Tata Consultancy Services BPO Chile SA (Formerly
Tata Consultancy Services Chile Limitada)
96 Tata Consultancy Services Canada Inc.(formerly Exegenix Canada Inc. )
97 Tata Consultancy Services Chile S.A.
98 Tata Consultancy Services De Espana S.A.
99 Tata Consultancy Services De Mexico S.A., De C.V.
100 Tata Consultancy Services Deutschland GmbH
101 Tata Consultancy Services Do Brasil Ltda (Formerly
Tata Consultancy Services Do Brasil S.A.)
102 Tata Consultancy Services France SAS (Formerly TKS - Tecknosoft (France) SAS)
103 Tata Consultancy Services Japan Ltd.
104 Tata Consultancy Services Luxembourg S.A
105 Tata Consultancy Services Malaysia Sdn Bhd
106 Tata Consultancy Services Morocco SARL AU
107 Tata Consultancy Services Netherlands BV
108 Tata Consultancy Services Portugal Unipessoal Limitada
109 Tata Consultancy Services Sverige AB
110 Tata Consultancy Services Switzerland Ltd. (Formerly TKS - Tecknosoft S.A.)
111 Tata Information Technology (Shanghai) Company Limited
112 Tata Infotech (Singapore) Pte. Limited
113 Tata Infotech Deutschland GmbH (Ceased to be a subsidiary w.e.f. 22.10.2008 )
114 TATASOLUTION CENTER S.A
115 TCS e-Serve America, Inc (w.e.f.10.2.2009 )
116 TCS e-Serve International Limited (Formerly CGSL
International Limited)(w.e.f. 31.12.2008 )
117 TCS e-Serve Limited (Formerly Citigroup Global Services Limited)
(w.e.f. 31.12.2008 )
118 TCS Financial Management, LLC
119 TCS Financial Solutions Australia Holdings Pty Limited
(Formerly Financial Network Services (Holdings) Pty. Limited)
120 TCS Financial Solutions Australia Pty Limited (Formerly
Financial Network Services Pty. Limited)
121 TCS FNS Pty. Limited
122 TCS Iberoamerica SA
123 TCS Inversiones Chile Limitada
124 TCS Italia SRL
125 TCS Management Pty Ltd.
126 TCS Solution Center S.A.
127 WTI Advanced Technology Ltd.
D Key Management Personnel (Managing Director)
1 Dr Mukund Govind Rajan (from Feb 28, 2008)
2 Charles Anthony (Upto Feb 29, 2008)
A Holding Company
Tata Sons Limited
B Subsidiary Companies
21st Century Infra Tele Limited (W.E.F. 01.07.08)
C List of Fellow Subsidiaries
1 Actve Digital Services Pvt Ltd (W.E.F. 21.04.2008)
2 Computational Research Laboratories Limited
3 Concept Marketing and Advertising Limited
4 e-Nxt Financials Limited
5 Ewart Investment Private Limited
6 Ewart Investments Limited
7 Good Health TPA Services Limited (W.E.F. 11.09.08)
8 Infiniti Retail Limited (formerly Value Electronics Limited)
9 Nova Integrated Systems Limited (W.E.F. 26.09.08)
10 Panatone Finvest Limited
11 Tara Aerospace Systems Limited (W.E.F. 26.09.08)
12 Tata Advanced Systems Limited (W.E.F. 26.09.08)
13 Tata AG, Zug
14 Tata AIG General Insurance Company Limited
15 Tata AIG Life Insurance Company Limited
16 Tata Asset Management (Mauritius) Pvt Limited
17 Tata Asset Management Limited
18 Tata Business Support Services Limited (formerly E2E SerWiz Solutions Limited)
19 Tata Capital Advisors Pte. Limited (W.E.F. 05.12.08)
20 Tata Capital Housing Finance Limited (W.E.F. 15.10.08)
21 Tata Capital Limited (formerly Primal Investment and Finance Limited)
22 Tata Capital Markets Limited
23 Tata Capital Markets Pte. Limited (W.E.F. 05.12.08)
24 Tata Capital Pte. Limited (W.E.F. 17.07.08)
25 Tata Consultancy Services Limited
26 Tata Housing Development Company Limited (formerly THDC Limited)
27 Tata International AG, Zug
28 Tata Internet Services Limited
29 Tata Investment Corporation Limited
30 Tata Limited
31 Tata Pension Management Ltd
32 Tata Petrodyne Limited
33 Tata Realty and Infrastructure Limited
34 Tata Securities Limited
35 Tata Sky Limited
36 Tata Teleservices Limited
37 Tata Trustee Company Pvt. Ltd.
38 TC Travel And Services Limited (W.E.F. 15.10.08)
39 TCE Consulting Engineers Limited
40 Tce QSTP-LLC (W.E.F. 07.07.08)
41 TRIF Investment Management Limited
42 Wireless TT Info Services Limited
43 Acme Living Solutions Pvt. Ltd. (W.E.F.29.01.09)
44 Ahinsa Realtors Pvt. Ltd.
45 Ardent Properties Pvt. Ltd. (W.E.F.19.12.08)
46 Arrow Infra Estates Pvt. Ltd. (W.E.F.30.09.08)
47 Gurgaon Construct Well Pvt. Ltd. (formerly Unitech
Construct Well Pvt. Ltd.) (W.E.F.30.09.08)
48 Gurgaon Infratech Pvt. Ltd. (formerly Unitech Infratech Pvt. Ltd.)
(W.E.F.30.09.08)
49 Gurgaon Realtech Ltd.(formerly Unitech Real Tech Ltd.) (W.E.F.30.09.08)
50 Landscape Structures Pvt. Ltd. (W.E.F.19.12.08)
51 Navinya Buildcon Pvt. Ltd.
52 Pioneer Infratech Pvt. Ltd.
53 TRIF Amritsar Projects Private Limited ((W.E.F.18.09.08)
and Ceased to be a subsidiary w.e.f. 01.03.09)
54 TRIF Constructions Pvt. Ltd. (W.E.F.12.12.08)
55 TRIF Erectors Pvt. Ltd. (W.E.F.31.12.08)
56 TRIF Gandhinagar Projects Pvt. Ltd.
57 TRIF Hyderabad Projects Pvt. Ltd.
58 TRIF Infrastructure Pvt. Ltd.
59 TRIF Kochi Projects Pvt. Ltd.
60 TRIF Kolkata Projects Pvt. Ltd.
61 TRIF Mega Projects Pvt. Ltd (W.E.F.31.12.08)
62 TRIF Modern Superstructures Pvt. Ltd. (W.E.F.31.12.08)
63 TRIF Property Development Pvt. Ltd.
64 TRIF Real Estate and Development Pvt. Ltd.
65 TRIF Realty Projects Pvt. Ltd.
16. Derivatives
As at Mar 31,2009
USD in Rs. in
Millions Crores
94.49 479.28
- -
94.49 479.28
80.30 407.26
As at Mar 31,2009
USD in Rs. in
Millions Crores
15.81 80.17
50.62 256.74
66.43 336.91
March 31,200917 Earnings Per Share Data
159.60
1,897,100,866
10
(0.84)
(0.84)
18. Quantitative details of principal items of goods traded (Starter Kits):
Quantity Value(Nos.) Rs. in Crores
19.
No.of Units FaceValue (Rs.) Cost (Rs. in Crores)
i) Outstanding derivatives :
As at March 31, 2008
USD in Rs. in
Millions Crores
a) Forward Contracts - -
b) Currency options for hedging of foreign
currency exposure 26.90 107.87
Total 26.90 107.87
c) Interest Rate Swaps 25.90 103.86
ii) The mark to market loss of outstanding currency options and interest rate swaps as at the year-end aggregate toRs.Nil (Previous year Rs.13.57 Crores).
iii) The foreign currency exposure that are not hedged by derivative instruments:
As at March 31, 2008
USD in Rs. in
Millions Crores
FCCB (including redemption premium) 18.60 74.59
Vendor payables 81.60 327.34
100.20 401.93
March 31,2008
i) Loss afterTax (Rs. in Crores) 125.74
ii) Weighted average number of shares outstanding. 1,848,516,984
iii) NominalValue of Equity Shares (Rs.) 10
iv) Basic Earnings per Share (Rs.) (0.68)
v) Diluted Earnings per Share (Rs.) (0.70)
In calculating the earnings per share the effect of dilution on account of outstanding ESOPs and FCCBs is ignored sinceresults are anti- dilutive.
a) Opening Stock 603678 2.22(535597) (2.22)
b) Purchases 2935085 9.16(2079026) (7.80)
c) Sales 2864615 18.78(2010945) (13.40)
d) Closing Stock 674148 2.01(603678) (2.22)
Following units have been purchased and redeemed by the Company during the year ended March 31, 2009:
HDFC Cash Mgt Fund - Savings Plan Growth 20852562 10 37
ICICI Prudential Institutional Liquid Plan- Super Inst.Growth 7701668 10 10
52
th14 Annual Report 2008-2009
20. Managerial Remuneration
2008-09
Rs. in Crores
1.11
0.06
0.68
1.85
2008-09
Rs. in Crores
0.03
i) Managing Director
2007-08
Rs. in Crores
Salaries 1.21
Contribution to Provident and other Fund 0.15
Monetary value of perquisites 0.09
Total 1.45
Note:
a) 2008-09 figures include Rs.0.77 Crores paid during the year for 2007-08 on account of bonus / performancepay
b) 2007-08 figures include Rs.0.57 Crores paid during the year for 2006-07 on account of bonus / performancepay.
c) Managerial remuneration for 2008-09 includes Rs.0.77 Crores (2007-08 includes Rs. 1.40 Crores) paid toprevious Managing Director.
ii) Non-executive Directors2007-08
Rs. in Crores
Directors' Sitting Fees 0.03
21.
22.
23.
24.
25.
The Company commenced provision of mobile services using CDMA technology in the year 2003. Currently, theCompany provides fixed wireless telephony services using the erstwhile Time Division Multiple Access (TDMA)technology to certain selected Village Public Telephone (VPT) customers only. Since the erstwhile TDMA technologyhas become obsolete, the Company has during the previous year decided to dispose off the fixed assets pertaining toTDMA technology except for those being utilized to service the aforesaid VPT Customers, aggregating Rs.610.75Crores (Net block Rs.4.64 Crores) {including those lying in capital inventory aggregated to Rs.13.81 Crores (Net BlockNil)}. Accordingly the said assets were retired from active use and transferred to 'Assets awaiting disposal', at anestimated realisable value of Rs. 2.30 Crores in the previous year, of which during the current year the Company haswritten off assets aggregating Rs.1.20 Crores being not realizable.
The Company, during the year, has identified certain Network Interface Units (NIU's), which have been disconnectedand are not in use (including not retrieved) and also have been fully depreciated in the books of account. Themanagement, having regard to the present condition of the said NIUs, their future usability and the fact that these NIUshave been fully depreciated, have decided to write-off the same. Accordingly the said NIU's aggregating Rs.368.58Crores (cost) have been written off during year and removed from the block of fixed assets.
The Company during the previous year, has been granted approval by DoT for providing telecommunication servicesusing GSM technology under the terms of the existing Unified Access Services Licenses.The amounts paid towards therelated license fees aggregating Rs.392.66 Crores have been capitalised as intangible assets. The Company hasalready been allotted trial Spectrum by DoT for Mumbai Service Area , Maharashtra and Goa Service Area.
In accordance with it's accounting policy, the Company will commence amortization of the license fees paid, oncommencement of GSM operations and will amortise such fees over the remaining life of the respective license.
The borrowing costs attributable to the GSM operations aggregating Rs.45.63 Crores (Previous Year Rs.8.63 Crores)have been capitalized during the year in accordance with AS 16 on 'Borrowing Costs' and included under Capital Workin Progress.
As per information available with the Company, none of the creditors has confirmed that they are registered under theMicro, Small and Medium enterprises Development Act, 2006.The disclosure regarding dues to such creditors is givenaccordingly in Schedule 11.
During the year, the Company has acquired a wholly owned subsidiary viz. 21st Century Infra Tele Limited (21stCentury).
Consequent to the Shareholders approval on transfer of “Passive Tower Infrastructure Business” ('PI Business'), theCompany has entered into a Business Transfer Agreement ('BTA') on September 30, 2008 to transfer the same on agoing concern basis to 21st Century. The transfer includes transfer of assets (fixed and current), liabilities (specific)
53
related to the PI Business for a lump sum consideration of Rs.293.30 Crores.The book value of the assets and liabilitiestransferred as at September 30, 2008 and the resulting profit are as follows:
Fixed assets (WDV) 271.91CapitalWork in Progress 11.73Current assets 13.03Current liabilities (3.44)
Less:Sale Consideration 293.30
With effect from April 1, 2008, the Company has decided to recognise the upfront (Universal Service Obligation) USOsubsidy granted by Department of Telecommunication over the remaining validity period of the scheme/agreement asagainst the method of recognizing the said revenue over a period of 5 years from the date of receipt from DoT.Accordingly, "Other Income" for the year is higher by Rs.17.95 Crores, and "Loss after tax " is lower by the like amount.
The Central Government, vide notification dated March 31, 2009, amended AS 11 on ´The Effect of Changes in ForeignExchange Rates´, whereby, companies have been given an option to account for exchange differences arising onreporting of long-term foreign currency monetary items (assets/liabilities) in so far as they relate to acquisition of adepreciable capital asset, to be added/deducted from the cost of the asset and for others to be accumulated in aseparate reserve to be amortized over the balance life of the asset/liability but not beyond March 31, 2011. Theaforesaid option is effective with retrospective effect in respect of accounting periods commencing on or afterDecember 7, 2007. The Company has exercised this option and has given the following effect in the accounts for theaforesaid:
a) Exchange gain (net of depreciation) relating to year ended March 31, 2008 adjusted in debit balance of Profit andLoss account and Plant and Machinery aggregating to Rs.18.76 Crores.
b) Exchange loss relating to year ended March 31, 2009 adjusted against carrying value of fixed assets aggregatingto Rs.49.45 Crores.
Due to the aforesaid option exercised by the Company, the depreciation for the year is higher by Rs.0.88 Crores and theloss for the year is lower by Rs. 48.57 Crores and the amount (after the aforesaid adjustments) of Plant and Machineryremaining to be amortised as at March 31, 2009 aggregates to Rs.29.81 Crores.
The accumulated losses of the Company at the close of the year have exceeded its paid-up capital and reserves.This,however, is not uncommon for telecommunication service providers in their initial years of commercial operations, dueto high operation costs of heavy infrastructure and high capital requirement for building the network. The Company isconsistently making cash profits, and has been able to grow its subscriber base and network. The Company is inadvanced stages of financial closure for proposed GSM and other Network Roll out and would be able to meet its furtherfunding requirements.The Company in the previous year had also paid Rs.392.66 Crores as license fees for providingservices using GSM technology under the existing licenses and expects to roll-out the related services during the nextfinancial year. Based on the foregoing considerations, the Company is confident of it's ability to continue in business asa going concern and the accounts have accordingly been prepared on this basis.
Figures of the previous year are regrouped and reclassified wherever necessary to correspond to figures of the currentyear.
As per our attached report of even date
Chartered Accountants
Partner ( ) (Managing Director)
Place : MumbaiDated: Dated: May 11, 2009
Particulars As atSeptember 30,2008(Rupees in Crores)
Total 293.23
Profit 0.07
26.
2 .
28.
29.
Signatures to Schedules '1' to '17'
For Deloitte Haskins & Sells For and on behalf of the Board
A.B. Jani Kishor A. Chaukar Dr. Mukund Rajan
7
S. Venktesan Madhav J. Joshi
Chairman
(Chief Financial Officer) (Chief Legal Officer& Company Secretary)
Place : MumbaiMay 11, 2009
54
th14 Annual Report 2008-2009
55
CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 20092008-09 2007-08
Rs. in Crores Rs. in Crores
A Cash flows from operating activities
Net Loss before tax (158.39) (124.81)
Adjustments for :
Depreciation/Amortisation 446.79 439.35
Gain on Fixed assets sold/written off (Net) - (1.79)
Loss on Fixed assets sold/written off/retired from active use.(Net) 0.34 2.34
Profit on transfer of Tower Business Hive off (0.07) -
Profit on redemption of units (Current Investment) (0.03) (0.07)
Foreign exchange loss/(gain) (Net) 36.13 (9.98)
Interest income - (1.21)
Finance and Treasury charges (Net) 268.68 182.27
751.84 610.91
Operating profit before working capital changes 593.45 486.10
(Increase) in Sundry Debtors (39.25) (31.16)
(Increase) in Loans and Advances (95.95) (43.32)
Decrease in Inventory 0.21 -
(Decrease)/Increase in Current liabilities and Provisions (75.58) 69.78
Cash Generated from operations 382.88 481.40
Fringe Benefit Tax paid (1.21) (0.93)
Net Cash generated from operating activities 381.67 480.47
B Cash flow from investing activities
Purchase of Fixed Assets (798.25) (1,207.99)
Proceeds from sale of Fixed Assets 1.32 3.47
Proceeds from Hive off of Tower business 293.30 -
Investment in Subsidiary (75.00) -
Profit on redemption of units (Current Investment) 0.03 0.07
Interest received - 1.21
Net Cash used for investing activities (578.59) (1203.24)
C Cash flow from financing activities
Proceeds from Long term borrowings - 296.28
Repayment of Long term borrowings (213.22) (57.38)
Proceeds from Short term borrowings 1,080.33 414.00
Repayment of Short term borrowings (539.00) (11.34)
Proceeds from Acceptance and Cash Credit ( Net) 151.27 162.93
Finance and Treasury charges paid (289.43) (130.87)
Net cash generated from financing activities 189.95 673.62
Net decrease in cash or cash equivalents (6.98) (49.15)
Cash and cash equivalents at beginning of the year 34.46 83.61
Cash and cash equivalents at end of the year 27.48 34.46
(6.98) (49.15)
Notes to Cash Flow Statement
1.
2.
3. Conversion of Foreign Currency Convertible Bonds into Equity Shares are not considered in the Cash Flow Statement.
As per our attached report of even date
For Deloitte Haskins & Sells For and on behalf of the Board
Chartered Accountants
A.B.Jani Dr.Mukund Rajan
Partner ( )Chairman (Managing Director)
S. Venkatesan Madhav J. Joshi
(Chief Financial Officer) (Chief Legal Officer and
Place: Mumbai Place: Mumbai Company Secretary)
Date: May 11, 2009 Date: May 11, 2009
Components of Cash and Cash Equivalents includes Cash, bank balances in Current and Term Deposit Accounts (Refer Schedule 7 to the Balance
Sheet).
Purchase of Fixed Assets are inclusive of movements in Capital Work in Progress between the commencement and end of the year
Kishor A. Chaukar
BALANCE SHEET ABSTRACT AND GENERAL BUSINESS PROFILE
I Registration Details
Registration No. 11-86354
State Code 11
Balance Sheet Date March 31, 2009
II Capital raised during the year (Rs. in Crores)
(Equity Share Capital & Security Premium Account)
Public Issue -
Rights Issue -
Bonus Issue -
Private Placement (Conversion of FCCB) 3.63
III Position of Mobilisation and Deployment of Funds (Rs. in Crores)
Total Liabilities 5,592.64
Total Assets 5,592.64
Sources of Funds
Paid-up Capital 1,897.19
Reserves & Surplus 583.16
Secured Loans 2,036.13
Unsecured Loans 1,076.16
Application of Funds
Investments 75.00
Net Fixed Assets (including Capital Work-in-Progress) 3,117.15
Net Current Assets (448.19)
Accumulated Losses 2,848.68
IV Performance of the Company (Rs. in Crores)
Turnover (including other income) 2,053.96
Expenditure 1,460.78
Loss Before Tax (158.39)
Loss After Tax (159.60)
Earning Per Share (Rs.) (0.84)
Dividend Rate -
V Generic Names of three Principal Products/Services of the Company
Item Code No. (ITC Code) Not Applicable
Product Description Telecommunication Services
For and on behalf of the Board
Dr. Mukund Rajan
( )Chairman (Managing Director)
S. Venkatesan Madhav J. Joshi
(Chief Financial Officer) (Chief Legal Officer and
Company Secretary)
Place: Mumbai
` Date: May 11, 2009
56
th14 Annual Report 2008-2009
Kishor A. Chaukar
Auditors' Report
To, the Board of Directors of Tata Teleservices (Maharashtra) Limited
Deloitte Haskins & Sells
A.B. Jani
1) We have audited the attached Consolidated Balance Sheet of Tata Teleservices (Maharashtra) Limited (the Company)and it's subsidiary (collectively referred to as “the Group”), as at March , 2009, the Consolidated Profit and Lossaccount and the Consolidated Cash Flow Statement for the year ended on that date, annexed thereto. TheseConsolidated Financial Statements are the responsibility of the Company's management and have been prepared bythe management on the basis of separate financial statements and other financial information regarding components.Our responsibility is to express an opinion on these Consolidated Financial Statements based on our audit.
2) We conducted our audit in accordance with auditing standards generally accepted in India. Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatements. An audit includes, examining on a test basis, evidence supporting the amounts anddisclosures in the financial statements.An audit also includes assessing the accounting principles used and significantestimates made by the management, as well as evaluating the overall financial statement presentation.We believe thatour audit provides a reasonable basis for our opinion.
3) We did not audit the financial statements of the subsidiary, whose financial statements reflect total assets of Rs.3 .rores as at , total revenues of Rs.4.17 rores and net cash inflows amounting to Rs.22 . rores for
the year then ended. These financial statements and other financial information have been audited by other auditorswhose report has been furnished to us, and our opinion, in so far as it relates to the amounts included in respect of thissubsidiary, is based solely on the report of the other auditors.
4) We report that the Consolidated Financial Statements have been prepared by the Company in accordance with therequirements of Accounting Standard (AS) 21, on 'Consolidated Financial Statements' notified in the Companies(Accounting Standard) Rules, 2006.
5) Based on our audit and on consideration of report of other auditors on separate financial statements and on the otherfinancial information of the components, in respect of the subsidiary referred to in paragraph 3 above, and to the best ofour information and according to the explanation given to us, we are of the opinion that the attached ConsolidatedFinancial Statements give a true and fair view in conformity with the accounting principles generally accepted in India :
a) in the case of the Consolidated Balance Sheet, of the state of affairs of the Group as at ;
b) in the case of the Consolidated Profit and Loss Account, of the loss for the year ended on that date;and
c) in the case of the Consolidated Cash Flow Statement, of the cash flows for the year ended on that date.
ForChartered Accountants
PartnerMembership No. 46488
MumbaiDated: May 11, 2009
31
51 08C March31, 2009 C 3 65 C
March31, 2009
57
CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2009
As at
March 31, 2009
Rs. in Crores
SOURCES OF FUNDS
Shareholders' Funds
Share Capital 1 1,897.19
Reserves and Surplus 2 583.16
2,480.35
Loan Funds
Secured Loans 3 2,166.13
Unsecured Loans 4 1,178.16
3,344.29
Total 5,824.64
APPLICATION OF FUNDS
Fixed Assets 5
Gross Block (at cost) 4,948.80
Less : Accumulated Depreciation 1,753.12
Net Block 3,195.68
Capital Work-in-Progress 229.87
3,425.55
Investments 6 10.00
Current Assets, Loans and Advances
Cash and Bank Balances 7 27.49
Sundry Debtors 8 252.67
Inventories 9 2.01
Loans and Advances 10 308.75
590.92
Less : Current Liabilities and Provisions
Current Liabilities 11 1,024.14
Provisions 12 36.71
1,060.85
Net Current Liabilities (469.93)
Profit and Loss Account 2,859.02
Total 5,824.64
Significant Accounting Policies and Notes to Financial Statements 17
As per our attached report of even date
For Deloitte Haskins & Sells For and on behalf of the Board
Chartered Accountants
A.B.Jani Dr. Mukund Rajan
Partner ( )Chairman (Managing Director)
S. Venkatesan Madhav J. Joshi
(Chief Financial Officer) (Chief Legal Officer and
Company Secretary)
Place: Mumbai Place: Mumbai
Date: May 11, 2009 Date: May 11, 2009
Schedule
th14 Annual Report 2008-2009
58
Kishor A. Chaukar
CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2009
Schedule 2008-09
Rs. in Crores
INCOME
Telecommunication Services 13 1,941.68
Infrastructure Sharing Revenue 4.17
Other Income 14 112.21
Total 2,058.06
EXPENDITURE
Operation and Other Expenses 15 1,457.98
Profit before Finance and Treasury charges, 600.08
Depreciation and Tax
Finance and Treasury Charges (Net) 16 305.68
Depreciation /Amortisation. (Refer Note a of Schedule 5) 463.13
Loss before tax (168.73)
Provision for Tax
- Fringe Benefits Tax 1.21
Loss after tax (169.94)
Balance brought forward (2,670.32)
Add: Adjustment on account of notification on transitional
provision of Accounting Standard 11 (Refer Note 26 of Schedule 17) (18.76)
(2,689.08)
Balance carried to Balance Sheet (2,859.02)
Earnings Per Share - Basic and Diluted (Rs.) (0.90)
(Refer Note 17 of Schedule 17)
Par Value (Rs.) 10.00
Significant Accounting Policies and Notes to Financial Statements 17
As per our attached report of even date
For Deloitte Haskins & Sells For and on behalf of the Board
Chartered Accountants
A.B.Jani Dr. Mukund Rajan
Partner ( )Chairman (Managing Director)
S. Venkatesan Madhav J. Joshi
(Chief Financial Officer) (Chief Legal Officer and
Company Secretary)
Place: Mumbai Place: Mumbai
Date: May 11, 2009 Date: May 11, 2009
59
Kishor A. Chaukar
SCHEDULES FORMING PART OF THE BALANCE SHEETAS AT MARCH 31, 2009
CONSOLIDATED
As atMarch 31, 2009
Rs. in Crores
SCHEDULE - 1
SHARE CAPITAL
Authorised
2,500,000,000 Equity Shares of Rs.10/- each 2,500.00
2,500.00
Issued and Subscribed
1,897,190,504 Equity Shares of Rs.10/- each fully paid-up 1,897.19
1,897.19
Notes:
1.
2.
SCHEDULE - 2
RESERVES AND SURPLUS
Securities Premium account:-
Balance at the beginning of the year 576.17
Add: On conversion of Foreign Currency Convertible Bonds 6.99
Balance at the end of the year 583.16
SCHEDULE - 3
SECURED LOANS
From Banks (Refer note 1 below)
Term Loans 1,553.68
Cash Credit Accounts 47.87
Acceptances 564.57
2,166.12
Deferred payment credits (Refer note 2 below) 0.01
2,166.13
Of the above 1,245,259,393 Equity Shares are held up by Tata Sons Limited (the ultimate Holding Company) and
its Subsidiaries.
Of the above 3,626,786 Equity Shares are issued during the period on conversion of Foreign Currency Convertible
Bonds.
th14 Annual Report 2008-2009
60
SCHEDULES FORMING PART OF THE BALANCE SHEETAS AT MARCH 31, 2009
CONSOLIDATED
Notes :
1.
- by first pari pasu charge on the movable and/or immovable assets of the company,
- by pledge of shares of promoters,
- by assignment of the proceeds on sale of network in the event of cancellation of the telecom license,
- by assignment of telecom license,
- by assignment of insurance policies,
- by hypothecation of present and future book debts and outstanding money receivable,
2. Secured by hypothecation of vehicles acquired out of the loans.
SCHEDULE - 4
UNSECURED LOANS
Foreign Currency Convertible Bonds (FCCB) 67.16
(Refer note below)
From Banks
- Short Term Loans 1,111.00
1,178.16
Note:
Loans from Banks are secured by either one or more of the following as per terms of the arrangements with
respective banks:
During the year ended March 31, 2005, the Parent Company issued FCCB of USD 125 millions at an interest rate of 1%
per annum (payable semi-annually). The holders of these Bonds have an option to convert the Bonds into Equity Shares
of the Parent company on or after July 1, 2004 at a pre-determined price of Rs.24.96 per Equity Share .Subsequent to
rights issue of Equity Shares, the conversion price has been adjusted to Rs.24.49 per Equity Share.The Bonds that are
not converted into Equity Shares, are redeemable at a premium of 19.38% at the end of 5 years from the date of issue.
61
SCHEDULES FORMING PART OF THE BALANCE SHEETAS AT MARCH 31, 2009
CONSOLIDATED
th14 Annual Report 2008-2009
62
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SCHEDULES FORMING PART OF THE BALANCE SHEETAS AT MARCH 31, 2009
CONSOLIDATED
As atMarch 31, 2009
Rs. in Crores
SCHEDULE - 6
INVESTMENT
Current Investment (At lower of cost or net realizable value) (Quoted)
Non - Trade:
77,01,448.944 units of ICICI Prudential Liquid Plan Super Institutional Growth 10.00
Plan - Face Value of Rs 10 each (NAV of Rs. 12.99 each)
10.00
SCHEDULE - 7
CASH AND BANK BALANCES
Cash on hand 0.02
Balance with Scheduled Banks in
- Current Accounts 27.41
- Cash Credit Accounts (Refer Note 1 of Schedule 3) 0.06
27.49
SCHEDULE - 8
SUNDRY DEBTORS
(Unsecured )
Outstanding for a period exceeding six months 276.45
Others 237.06
513.51
Less: Provision 260.84
252.67
Note:
Considered good 252.67
Considered Doubtful 260.84
SCHEDULE - 9
INVENTORY
Traded Goods
Starter Kits 2.01
2.01
63
SCHEDULES FORMING PART OF THE BALANCE SHEETAS AT MARCH 31, 2009
CONSOLIDATED
March 31, 2009Rs. in Crores
SCHEDULE - 10
LOANS AND ADVANCES
(Unsecured)
Advances recoverable in cash or in kind or for value to be received 265.77
[Includes Rs.0.18 Crores due from an officer of the Company
Maximum amount outstanding at any time during the year is Rs.0.18 Crores]
Premises and other deposits 40.05
Assets retired from active use awaiting Disposal (Refer Note 21 of Schedule 17) 0.56
Advance Tax paid (Tax Deducted at Source) 4.99
311.37
Less : Provision 2.62
308.75
Note :
Considered good 308.75
Considered doubtful 2.62
SCHEDULE - 11
Current Liabilities
Sundry Creditors (Refer Note 24 of Schedule 17)
Total Outstanding dues of Micro Enterprises and Small Enterprises -
Total Outstanding dues of Creditors other than Micro Enterprises and Small Enterprises:
- Under Usance Letter of Credit 136.33
- Others 735.88
872.21
Deposits from Customers and others 86.07
Interest accrued but not due on loans 4.97
Other liabilities 60.89
1,024.14
Note: Other Liabilites include temporary overdrawn bank balances aggregating to Rs.10.74 Crores
SCHEDULE - 12
Provisions
For Contingencies 16.74
For Retirement benefits 5.27
For Premium on Redemption of FCCB 14.55
For Fringe Benefits Tax (net of advances) 0.15
36.71
Note: Provision for contingencies relate to certain claims by vendors on the Company made in earlier years and there is
no movement in the same during the period.
th14 Annual Report 2008-2009
64
SCHEDULESAS AT MARCH 31, 2009
FORMING PART OF CONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED
April 1, 2008 toMarch 31, 2009
Rs. in Crores
SCHEDULE - 13
TELECOMMUNICATION SERVICES
Telephony 1,679.95
Internet Services 48.81
Interconnection Usage Charges [including in respect of earlier years Rs.5.46 Crores] 194.14
Sale of Traded Goods 18.78
1,941.68
SCHEDULE - 14
OTHER INCOME
Subsidies from Department of Telecommunications (DoT) (Refer Note 25 of schedule 17) 92.94
Liability in respect of earlier years written back 8.21
Infrastructure Sharing 4.28
Sale of Refurbished NIU's 2.91
Miscellaneous Receipts 3.87
112.21
SCHEDULE - 15
OPERATION AND OTHER EXPENSES
Network Operation costs
Revenue Share to DoT 171.34
Repairs and Maintenance - Plant and Machinery [including capital inventory 63.03
consumed Rs 15.71 Crores]
Power 59.15
Rent 19.66
Rates and taxes 8.88
Insurance 1.08
Infrastructure Sharing Cost 25.23
Others 11.58
359.95
Interconnection and Other access costs [including in respect of earlier years Rs.5.98 Crores] 474.64
Payments to and Provisions for Employees
Salaries and Bonus [Net of excess provision for earlier year written back Rs. 5.80 Crores] 98.76
Contribution to Provident and other Funds 5.62
Staff Welfare 8.60
112.98
65
SCHEDULESAS AT MARCH 31, 2009
FORMING PART OF CONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED
April 1, 2008 toMar 31, 2009Rs. in Crores
Administrative and Other expenses
Rent 14.12
Rates and taxes 6.68
Repairs and Maintenance -others 6.08
Travel and conveyance expenses 18.48
Collection/Credit verification charges 12.58
Customer service and call centre cost 80.11
Assets awaiting disposal written off (Refer Note 21 of Schedule 17) 1.20
Loss on Fixed assets sold/written off/retired from active use (Net) 0.34
Provision for Bad/Doubtful debts and advances 15.75
(Net of insurance received amounting to Rs.4.59 Crores)
Insurance Expenses 0.04
Miscellaneous expenses 55.90
Contractual and other claims and liabilities (Net) 1.26
212.54
Marketing and business promotion expenses
Advertisement and business promotion expenses 105.52
Hand set Subsidy (Net of Rs.7.64 Crores incentive received) 83.74
Sales Commission and Expenses 99.25
Traded Goods - Starter Kits
Opening Stock 2.22
Purchases 9.15
Less: Closing stock 2.01
9.36
297.87
1,457.98
SCHEDULE - 16
FINANCE AND TREASURY CHARGES (NET)
Interest
On Fixed Term Loans 275.19
Others 13.66
Expenses for loan arrangement, bill discounting and bank charges 26.36
Foreign exchange fluctuations (Net) 36.13
351.34
Less: Interest Capitalized (Refer Note 23 of schedule17) 45.63
305.71
Less: Profit on redemption of units (Current Investment) 0.03
305.68
th14 Annual Report 2008-2009
66
SCHEDULES FORMING PART OF THE CONSOLIDATEDBALANCE SHEET AND PROFIT AND LOSS ACCOUNT
SCHEDULE 17
SIGNIFICANT ACCOUNTING POLICIES AND NOTES TOFINANCIAL STATEMENTS
1. Company background
.
2. Significant Accounting Policies
(a) Basis of preparation of financial statements
(b) Principles of Consolidation
Tata Teleservices (Maharashtra) Limited (“TTML”/”ParentCompany”), is licensed to provide basic and cellulartelecommunication services. TTML presently holds twoUnified Access (Basic and Cellular) Service Licenses, onefor Mumbai Service Area and another for Maharashtra andGoa and provides telecommunication services usingCode Division Multiple Access (CDMA) technology.TTMLhas also been granted approval by Department ofTe l e c o m m u n i c a t i o n s ( D o T ) fo r p r o v i d i n gtelecommunication services using Global System forMobile Communications (GSM) technology under theaforesaid licenses. TTML has already been allotted trialSpectrum by DoT for Mumbai, Maharashtra and GoaService Area TTML also holds the National InternetService provider InternetTelephony license.
TTML is a subsidiary of Tata Sons Limited (the ultimateholding Company).
21st Century Infra Tele Limited (“CITL”/”subsidiary”)became a wholly owned subsidiary of TTML w.e.f July 1,2008. CITL provides passive infrastructure support totelecommunication service providers. The Department ofTelecommunications, Ministry of Communication and IT,Government of India has registered CITL as aInfrastructure Provider Category I (IP-I) with effect from30th September, 2008. CITL has entered into a BusinessTransfer Agreement withTTML on September 30, 2008 forpurchase of “Passive Tower Infrastructure Business” ('PIBusiness') from TTML on a going concern basis for a lumpsum consideration.
The accompanying Consolidated Financial Statements ofTTML and its subsidiary as aforesaid (hereinafter togetherreferred as “the group”), have been prepared to comply inall material aspects with applicable accounting principlesin India, the Accounting Standards (AS) notified in theCompanies (Accounting Standards) Rules 2006. Thefinancial statements of the subsidiaries used in theconsolidation are drawn up to the same reporting date asthat of the Parent Company namely March 31, 2009.
The financial statements of the Parent Company and itssubsidiary have been consolidated on a line by line basisby adding together the book value of like items of assets,liabilities, income, expenses, after eliminating intra grouptransactions and any unrealized gain or losses on thebalances remaining within the group in accordance withthe Accounting Standard 21 on “Consolidated FinancialStatements” (AS-21).
The financial statements of the Parent Company and its
67
subsidiary have been consolidated using uniformaccounting policies for like transaction and other events insimilar circumstances.
The preparation of financial statements in conformity withgenerally accepted accounting principles requiresestimates and assumptions to be made that affect thereported amounts of assets and liabilities and disclosureof contingent liabilities on the date of the financialstatements and the reported amounts of revenues andexpenses during the reporting year. Differences betweenactual results and estimates are recognised in the periodsin which the results are known / materialise.
Fixed assets are stated at their historical cost ofacquisition or construction, less accumulateddepreciation/amortisation.Cost includes all costs incurredto bring the assets to their working condition and location(Also refer note 26).
Assets retired from active use and held for disposal arestated at lower of net book value or net realisable value.(Refer note 21).
Expenditure related to and incurred during theconstruction period of switches and cell sites arecapitalised as part of the construction cost and allocatedto the relevant fixed assets.
Capital inventory comprises switching equipment, fieldunit cards, tower equipment, capital stores and otheraccessories that are carried under Capital Work-In-Progress till such time as they are issued for newinstallation or replacement.
The Group capital ises software and relatedimplementation costs as intangible assets, where it isreasonably estimated that the software has an enduringuseful life.
License fees paid by the Parent Company for acquiringlicenses to operate telecommunication/internet telephonyservices are capitalised as intangible assets.
Indefeasible Rights to Use ('IRU') bandwidth capacities bythe Parent Company are capitalised as intangible assets.
Assets acquired pursuant to an agreement for exchangeof similar assets are recorded at the net book value of theassets given up, with an adjustment for any balancingreceipt or payment of cash or any other form ofconsideration.
i) Fixed assets are depreciated on a straight line basis,based on the following estimates of their usefuleconomic lives:
(c) Use of estimates
(d) Fixed Assets
(e) Depreciation
Buildings 60
Plant and Machinery
- Network Equipment 12
- Time Division Multiple Access (TDMA)
Equipment (Refer note 21) 9
Useful Life (in years)
- Outside Plant 18
- Network Interface Units (Refer note 22 ) 5
- Air- Conditioning Equipment 6
- Generators 6
- Electrical Equipments 6
- Computers 3
- Office Equipments 3
- Computer Software 3
Furniture and Fittings 3
Vehicles 5
ii) Leasehold land and premises are amortiseduniformly over the period of lease.
iii) Amortisation on License fees is provided foruniformly over the original license period of 20 yearsfrom the date of commencement of operation. Sincethe Parent Company has the intention of being inbusiness for a period well beyond 10 years and thetelecommunication business cannot be carried onwithout the Telecom license, the useful life of theasset will exceed the rebuttable presumption of 10years under AS 26 on “Intangible Assets”. (Refernote 23).
iv) Indefeasible Right to Use ('IRU') bandwidthcapacities taken by the Parent Company areamortised over a period of fifteen years based on atechnical estimate of useful life of the assets orperiod of the agreement whichever is lower.
v) Depreciation on additions and deletions to assetsduring the year is charged to revenue pro rata to theperiod of their use.
vi) The Group provides for obsolescence of its slowmoving capital inventory, by way of depreciation, atthe rate of 33.33% p.a.of cost.
i) Transactions in foreign currency are recorded at theoriginal rates of exchange in force at the timetransactions are effected.
ii) Foreign currency denominated assets and liabilitiesare reported as follows:
a) Monetary items are translated into rupees atthe exchange rates prevailing at the balancesheet date. Non-Monetary items such as fixedassets are carried at their historical rupeevalues.
b) Gains/losses arising on settlement of foreigncurrency transactions or restatement offoreign currency denominated assets andliabilities (monetary items) are recognised inthe profit and loss account, except for longterm assets/liabilities which pertain toacquisition of fixed assets which are adjustedin the cost of fixed assets (Refer note 26).
iii) In case of forward exchange covers entered into bythe Parent Company, the premium or discount
(f) Foreign Currency transactions
th14 Annual Report 2008-2009
68
arising at the inception of the contract is amortisedas expense or income over the life of the contract.
iv) Pursuant to the announcement on accounting forderivatives issued by the Institute of CharteredAccountants of India (ICAI), the Parent Company inaccordance with the principle of prudence asenunciated in Accounting Standard 1 on 'Disclosureof Accounting Policies' provides for losses in respectof all outstanding derivative contracts at the BalanceSheet date by marking them to market. Any gainsarising on such mark to market are not recognizedas income (refer note 16 (ii))
Retirement benefit costs are expensed to revenue asincurred.
Contributions to the Provident and Superannuation Fundsare made in accordance with the rules of the Funds.
The Parent Company participates in a group gratuity cumlife assurance scheme administered by the Life InsuranceCorporation (LIC). Provision for the year in respect ofgratuity is made on the basis of actuarial valuation as atthe end of the year.
Leave encashment and gratuity are provided for on thebasis of actuarial valuation as at the end of the year.
Revenue from telecommunication services is recognisedas the service is performed on the basis of actual usage ofthe Parent Company's network/in accordance withcontractual obligations and is recorded net of service tax.The amount charged to subscribers for specialisedfeatures which entitle them to access the network of theParent Company and where all other services andproducts are paid for separately, are recognised as andwhen such features are activated.
Revenue is recognised when it is earned and nosignificant uncertainty exists as to its ultimate realisationor collection.
Subsidies granted by Government for providing telecomservices in rural areas are recognized as income inaccordance with the relevant terms and conditions of thescheme / agreement with DoT (refer note 25 below).
Borrowing costs attributable to the acquisition of aqualifying asset, as defined in AS 16 on “BorrowingCosts”, are capitalised as part of the cost of acquisition.Other borrowing costs are expensed as incurred.
The Group reports basic and diluted earnings per share inaccordance with AS 20 on “Earnings Per Share”. Basicearning per share is computed by dividing the net profit orloss for the year by the weighted average number of Equityshares outstanding during the year. Diluted earnings per
.
(g) Employee benefits
(h) Revenue recognition
(i) Government Grants
(j) Borrowing costs
(k) Earnings per share
share is computed by dividing the net profit or loss for theyear by the weighted average number of Equity sharesoutstanding during the year as adjusted for the effects ofall dilutive potential equity shares, except where theresults are anti-dilutive.
Assets taken on Lease under which all significant risksand rewards of ownership are effectively retained by thelessor are classified as Operating Leases. Leasepayments under Operating Leases are recognized asexpenses as incurred in accordance with the respectiveLease Agreements.
The Cash Flow statement is prepared by the indirectmethod set out in AS 3 on “Cash Flow Statements” andpresents Cash flows by operating, investing and financingactivities of the group.
Premium payable on Redemption of FCCBs is fullyprovided for on issue of the FCCBs. The SecuritiesPremium Account is applied in providing for premium onredemption in accordance with Section 78 of the Act. Onconversion of the FCCBs to Equity Shares the redemptionpremium is reversed.
Expenses on issue of FCCBs and on Rights issue ofEquity Shares are written off to the Securities PremiumAccount in accordance with section 78 of the Act.
Net finance and treasury charges are disclosed in thefinancial statements. Interest and other income earnedfrom treasury operations are reduced from the costs oftreasury operations.
Inventories are valued at lower of cost and net realizablevalue. Cost of Inventories comprises all cost of purchasesand other costs incurred in bringing the inventories to theirpresent location and condition. Cost of traded goods isdetermined on weighted average basis.
Fringe Benefits Tax (FBT) is recognized as per theprovisions of the Income-tax Act, 1961 and the GuidanceNote on Accounting for Fringe Benefits Tax issued by theICAI.
An asset is considered as impaired in accordance with AS28 on “Impairment of Assets” when at the balance sheetdate there are indications of impairment and the carryingamount of the asset, or where applicable the cashgenerating unit to which the asset belongs, exceeds itsrecoverable amount (i.e. the higher of the asset's netselling price and value in use). In assessing the value inuse, the estimated future cash flows expected from thecontinuing use of the asset and from its ultimate disposal
(l) Operating Leases
(m) Cash Flow Statement
(n) Foreign Currency Convertible Bonds (FCCBs)Expenses
(o) Finance andTreasury charges
(p) Inventories
(q) Fringe BenefitsTax
(r) Impairment of assets
69
are discounted to their present values using a pre-determined discount rate.The carrying amount is reducedto the recoverable amount and the reduction is recognizedas an impairment loss in the profit and loss account.
Current investments are carried at lower of cost and fairvalue. Long term investments are carried at cost.
Provision is made to recognise a decline other thantemporary in the carrying amount of long terminvestments.
Contingent Liabilities as defined in AS 29 on “Provision,Contingent Liabilities and Contingent Assets” aredisclosed by way of notes to accounts.Provision is made ifit becomes probable that an outflow of future economicbenefits will be required for an item previously dealt with asa contingent liability.
(s) Investments
(t) Contingent Liabilities
3.
525.03
4.760.00
5. Contingent liabilities :
405.76
98.03
Estimated amount of contracts remainingto be executed on capital account and notprovided for (net of advances)
Counter guarantees given by theParent Company
(i) Claims against the Parent company not
acknowledged as debt
Telecom Regulatory Matters
(Refer notes below)
Others
Notes:
Contingent liabilities in respect of Telecom RegulatoryMatters include:
a) The Parent Company had received an Order fromthe Hon. Supreme Court dismissing the ParentCompany's petition regarding Access DeficitCharge (ADC) demanded by Bharat SancharNigam Limited (BSNL) in respect of 'fixed wireless'services provided under the brand name “WALKY”.Demand notices have been received from BSNL, topay ADC aggregating to Rs.108.49 crores for theperiod November 14, 2004 upto February 28, 2006;the date after which ADC is payable on Net AdjustedGross Revenue Basis.
Out of the above, the Parent Company, has, in earlieryears, already provided for amounts aggregating toRs.28.14 Crores pertaining to ADC for the periodfrom August 26, 2005 upto February 28, 2006. Thebalance amounts aggregating to Rs. 80.35 Croreshave been disclosed as Contingent Liability under'Telecom Regulatory Matters' as the Parentcompany is of the view that these demands includeamounts relating to 'wireline' services and ADC forthe period before August 26, 2005; the actual dateafter which, as per the directions of the DepartmentofTelecom, services provided under the brand name“WALKY” are to be considered as Wireless in Local
Loop (Mobile) for the purposes of ADC. The ParentCompany has filed a review petition in this regardand on the said basis, TDSAT vide its order datedAugust 12, 2008 held that BSNL and TTML shouldexchange relevant information and reconcile thedifferences. The Parent Company is awaiting therelevant information from BSNL.The ParentCompany is hopeful of success in the matter.
The Parent Company during the year has made onaccount payment to BSNL of Rs.50 Crores inrelation to the above, which is in addition to Rs. 25Crores paid in earlier years.
b) The Parent Company had received a demand letterdated March 17, 2008 from DoT for Rs.8.38 Crore,being a demand for spectrum charges for the periodfrom April 1, 2005 to February 29, 2008, which wasdisclosed as contingent liability as at March 31,2008.
This demand was subsequently revised toRs.184.69 Crores by DoT, vide its demand lettersdated July 3, 2008, for the period from October 1,1998 to June 30, 2008 which was further increasedto Rs. 266.00 Crores vide letter dated February 28,2009. The Parent Company has represented to theWPC various items of differences mentioned in thedemand orders, vide letter dated September 24,2008.Reconciliation of the differences is in progresswith the WPC.The Parent company is expecting arevised order after the completion of thereconciliation and is hopeful of success in the matter.
ii) Disputed Tax demands in Appeals before relevantauthorities:
IncomeTax
iii) The Parent Company has imported certain capitalequipment under “Export promotion of Capital GoodsScheme” of the Central Government at a concessionalrate of Customs Duty. The Parent Company hasundertaken export obligation to the extent of USD 10.08Crores (Rs. 404.41 Crores) [net of USD 6.55 Crores (Rs.262.24 Crores) for which the Parent Company hasapplied for exemption] to be fulfilled during a period of 8years commencing from the 29th January 2003, failingwhich the Parent Company will be liable to pay thedifferential customs duty, together with interest andpenalties, if imposed. Up-till the end of the year, the ParentCompany has fulfilled the export obligation to the extent ofRs.35.53 Crores (previous year Rs 21.22 Crores).
iv) The Parent Company in 2002 had filed a petition beforeTelecom Dispute and Settlement Appellate Tribunal(TDSAT) claiming refund of Rs.50 Crores recovered byDepartment of Telecommunications (DoT) in 1999alleging failure to sign basic services license agreementfor Karnataka circle after accepting Letter of Intent (LoI).DoT during the proceedings before TDSAT claimed fromthe Parent Company Rs.303 Crores towards loss of(opportunity to earn ) license fee and Rs. 351 Crores asinterest till October 31, 2002. TDSAT allowed refund ofRs.50 Crores to the Parent Company with interest of 17%p.a. and dismissed the counter-claim based on a law point
0.08
th14 Annual Report 2008-2009
70
(i.e.TDSAT had no jurisdiction) and facts. DoT appealed tothe Hon'ble Supreme Court which without commenting onthe merits of the counter-claim confirmed that TDSAT hadjurisdiction and remanded the matter to TDSAT for freshadjudication. DoT has filed with TDSAT a counter-claim ofRs.2,015 Crores which includes Rs.303 Crores towardsloss of (opportunity to earn) license fee and interest ofRs.1,712 Crores calculated upto March 31, 2008. TheTDSAT vide its order dated September 18, 2008 held thatsince the counter claim filed by DoT is in the nature of arecovery suit appropriate court fee needs to be affixed.Thematter has been adjourned for hearing on August 12,2009.The Parent Company is hopeful of success in thematter.
Counter guarantees have been given by the ParentCompany in the ordinary course of business and noliability is expected to accrue in this respect.
As regards other disputes and claims against the ParentCompany, appropriate competent professional advice isavailable to the Parent Company based on which,favorable outcomes are anticipated and no liability isexpected to accrue to the Parent Company.
In November 1999, the Parent Company established theEmployee Stock Option Plan (ESOP) under which EquityShares are reserved for issuance to eligible employees ofthe Parent Company. In terms of the plan, 1.20 Croreswarrants were issued to Hughes Tele.com (India) LimitedEmployees Stock Option Trust, to be held by it on behalf ofthe Parent Company for awarding eligible employees asand when advised by the Compensation Committeeconstituted for the purpose. Each allotted warrant carrieswith it a right to purchase one Equity Share of the ParentCompany at a price of Rs. 10/- per share. Other than2,40,000 fully vested warrants allotted in an earlier year, allallotted warrants vest at the rate of 25% on eachsuccessive anniversary of the grant date, until fully vested.The period during which the vested warrants may beexercised expires after 10 years from the date of thevesting.
The position of the allotted warrants is as follows:
6. Payments to Auditors (excluding service tax) :2008-09
Rs. in Crores
0.22
0.05
0.21
As at
March 31,2009
(Nos.)7,950
----
i) Audit fees
ii) Tax Audit fees
iii) Other matters (For Quarterly Audits,certification work etc.)
iv) Out of pocket expenses [Current year Rs.64,123/-]
Opening BalanceIssued during the yearForfeitedExercisedLapsed
Closing Balance 7,950
7.
Particulars As atMarch 31, 2009
Rs. in Crores
Projected benefit obligation,beginning of the year
2.27
Service cost 0.81
Interest cost 0.24
Actuarial loss on obligation 0.78
Benefits paid (0.11)
Projected benefit obligation,end of the year
3.99
Since the market value of the Parent Company’s shareson the grant dates did not exceed the exercise price of Rs.10/-, no compensation expense has been recorded
8.
The group is engaged in providing Telecommunicationservices and providing passive infrastructure supportservices to Telecommunication Service Provider.Accordingly, in accordance with Accounting Standard 17on “Segment reporting”, the primary reporting segmentsof the Group, therefore, are the business segment, viz.
i) Telecommunication Services
ii) Passive Infrastructure Services
A. The revenues / assets / results for the year from theactivity of providing passive infrastructure supportservices by the subsidiary company, is not materialto the consolidated financials. Accordingly, thebusiness segment of Passive Infrastructure SupportServices is not identified as a Reportable segment.
B. The group operated only in the Indian marketrepresenting a singular economic environment withsimilar risks and rewards and hence there are noreportable geographical segments.
Residential Flats foraccommodation of employeeCell Sites and others
Due not later than one year
Due later than one year and not
later than five years
The agreements are executed for a period rangingfrom 6 months to 15 years with a renewable clauseand in many cases also provide for termination atwill by either party giving a prior period noticeranging between 30 to 90 days.
The disclosure as required under AS 15 regarding thegroup's gratuity plan is as follows:
Segment information
9. (a) Operating lease rent expenses for the year inrespect of lease agreements entered from April1,2001
2008-09
Rs. in Crores
0.8256.86
(b) Future Minimum Lease Payments under Non-Cancellable Operating Lease :
36.86
123.67
10.
71
11. No provision for current income tax has been made in theaccounts, since the Group estimates that there will be notaxable profits for the period Deferred Tax charges/credits have not been recognized in view of the tax holidayenjoyed by the Parent Company and on considerations ofprudence as set out in AS 22 on “Accounting for Taxes onIncome”.
.
12. Value of imports on CIF basis in respect of :
2008-09
Rs. in Crores
364.39
13. Expenditure in Foreign Currency(Payment basis) on account of :
2007-08
Rs. in Crores
21.86
1.13
22.99
14. Value of Capital Inventory
consumed during the year :
2008-09
Rs. in Crores %
15.30 97
0.41 03
15.71 100
Capital Goods
Interest
Other
Indigenous
Imported
Actuarial Assumptions:
Discount rate 7.75%
Rate of increase in compensation levelsof covered employees
6.50%
Rate of Return on Plan Assets 8.00%
Projected benefit obligation, end of theyear
3.99
Fair value of plan assets at the end of theyear
2.77
Net liability recognized in the BalanceSheet.
1.22
Fair Value of Plan Assets at the beginningof the year
1.38
Expected Return on Plan Assets 0.21
Contributions 1.28
Benefit Paid (0.11)
Actuarial loss on Plan Assets 0.01
Fair Value of Plan Assets at the end ofthe year
2.77
Total Actuarial Loss Recognized (0.78)
Particulars As atMarch 31, 2009
Rs. in Crores
th14 Annual Report 2008-2009
72
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8
74
th14 Annual Report 2008-2009
15) Related Party disclosures (in terms of Accounting Standard - 18)
ii) Details of all Related Parties and their relationships
A Ultimate Holding Company 65 TRIF Realty Projects Pvt. Ltd.
Tata Sons Limited 66 TRIF Structures & Builders Pvt. Ltd. (W.E.F.31.12.08)
B Subsidiary Companies 67 TRIF Trivandrum Projects Pvt. Ltd.
21st Century Infra Tele Limited (W.E.F. 01.07.08) 68 TRIL Airport Developers Ltd.
C List of Fellow Subsidiaries 69 TRIL Constructions Ltd.
1 Actve Digital Services Pvt Ltd (W.E.F. 21.04.2008) 70 TRIL Developers Ltd.
2 Computational Research Laboratories Limited 71 APONLINE Limited
3 Concept Marketing and Advertising Limited 72 C-Edge Technologies Limited
4 e-Nxt Financials Limited 73 CMC Americas Inc
5 Ewart Investment Private Limited 74 CMC Limited
6 Ewart Investments Limited 75 Custodia De Documentos Interes Limitada
7 Good Health TPA Services Limited (W.E.F. 11.09.08) 76 Diligenta Limited
8 Infiniti Retail Limited (formerly Value Electronics Limited) 77 Financial Network Services (Africa) (Pty) Ltd.
9 Nova Integrated Systems Limited (W.E.F. 26.09.08) 78 Financial Network Services (Beijing) Co. Ltd.
10 Panatone Finvest Limited 79 Financial Network Services (Europe) plc (Ceased to be a subsidiary w.e.f. 2.12.2008)
11 Tara Aerospace Systems Limited (W.E.F. 26.09.08) 80 Financial Network Services (H.K.) Limited
12 Tata Advanced Systems Limited (W.E.F. 26.09.08) 81 Financial Network Services Malaysia Sdn Bhd (Under Voluntary Liquidation)
13 Tata AG, Zug 82 MP Online Limited
14 Tata AIG General Insurance Company Limited 83 PT Financial Network Services
15 Tata AIG Life Insurance Company Limited 84 PT Tata Consultancy Services Indonesia
16 Tata Asset Management (Mauritius) Pvt Limited 85 Syscrom S.A.
17 Tata Asset Management Limited 86 Tata America International Corporation
18 Tata Business Support Services Limited (formerly 87 Tata Consultancy Services (Africa) (PTY) Ltd.
E2E SerWiz Solutions Limited) 88 Tata Consultancy Services (China) Co., Ltd.
19 Tata Capital Advisors Pte. Limited (W.E.F. 05.12.08) 89 Tata Consultancy Services (Philippines) Inc. (w.e.f. 19.9.2008 )
20 Tata Capital Housing Finance Limited (W.E.F. 15.10.08) 90 Tata Consultancy Services (South Africa) (PTY) Ltd.
21 Tata Capital Limited (formerly Primal Investment and Finance Limited) 91 Tata Consultancy Services (Thailand) Limited (w.e.f. 12.5.2008 )
22 Tata Capital Markets Limited 92 Tata Consultancy Services Argentina S.A. (formerly TCS Argentina S.A. )
23 Tata Capital Markets Pte. Limited (W.E.F. 05.12.08) 93 Tata Consultancy Services Asia Pacific Pte Ltd.
24 Tata Capital Pte. Limited (W.E.F. 17.07.08) 94 Tata Consultancy Services Belgium SA
25 Tata Consultancy Services Limited 95 Tata Consultancy Services BPO Chile SA (Formerly Tata
26 Tata Housing Development Company Limited (formerly THDC Limited) Consultancy Services Chile Limitada)
27 Tata International AG, Zug 96 Tata Consultancy Services Canada Inc.(formerly Exegenix Canada Inc. )
28 Tata Internet Services Limited 97 Tata Consultancy Services Chile S.A.
29 Tata Investment Corporation Limited 98 Tata Consultancy Services De Espana S.A.
30 Tata Limited 99 Tata Consultancy Services De Mexico S.A., De C.V.
31 Tata Pension Management Ltd 100 Tata Consultancy Services Deutschland GmbH
32 Tata Petrodyne Limited 101 Tata Consultancy Services Do Brasil Ltda (Formerly
33 Tata Realty and Infrastructure Limited Tata Consultancy Services Do Brasil S.A.)
34 Tata Securities Limited 102 Tata Consultancy Services France SAS (Formerly TKS - Tecknosoft (France) SAS)
35 Tata Sky Limited 103 Tata Consultancy Services Japan Ltd.
36 Tata Teleservices Limited 104 Tata Consultancy Services Luxembourg S.A
37 Tata Trustee Company Pvt. Ltd. 105 Tata Consultancy Services Malaysia Sdn Bhd
38 TC Travel And Services Limited (W.E.F. 15.10.08) 106 Tata Consultancy Services Morocco SARL AU
39 TCE Consulting Engineers Limited 107 Tata Consultancy Services Netherlands BV
40 Tce QSTP-LLC (W.E.F. 07.07.08) 108 Tata Consultancy Services Portugal Unipessoal Limitada
41 TRIF Investment Management Limited 109 Tata Consultancy Services Sverige AB
42 Wireless TT Info Services Limited 110 Tata Consultancy Services Switzerland Ltd. (Formerly TKS - Tecknosoft S.A.)
43 Acme Living Solutions Pvt. Ltd. (W.E.F.29.01.09) 111 Tata Information Technology (Shanghai) Company Limited
44 Ahinsa Realtors Pvt. Ltd. 112 Tata Infotech (Singapore) Pte. Limited
45 Ardent Properties Pvt. Ltd. (W.E.F.19.12.08) 113 Tata Infotech Deutschland GmbH (Ceased to be a subsidiary w.e.f. 22.10.2008 )
46 Arrow Infra Estates Pvt. Ltd. (W.E.F.30.09.08) 114 TATASOLUTION CENTER S.A
47 Gurgaon Construct Well Pvt. Ltd. (formerly Unitech 115 TCS e-Serve America, Inc (w.e.f.10.2.2009 )
Construct Well Pvt. Ltd.) (W.E.F.30.09.08) 116 TCS e-Serve International Limited (Formerly CGSL
48 Gurgaon Infratech Pvt. Ltd. (formerly Unitech Infratech Pvt. Ltd.) (W.E.F.30.09.08) International Limited)(w.e.f. 31.12.2008 )
49 Gurgaon Realtech Ltd.(formerly Unitech Real Tech Ltd.) (W.E.F.30.09.08) 117 TCS e-Serve Limited (Formerly Citigroup Global Services Limited)
50 Landscape Structures Pvt. Ltd. (W.E.F.19.12.08) (w.e.f. 31.12.2008 )
51 Navinya Buildcon Pvt. Ltd. 118 TCS Financial Management, LLC
52 Pioneer Infratech Pvt. Ltd. 119 TCS Financial Solutions Australia Holdings Pty Limited
53 TRIF Amritsar Projects Private Limited ((W.E.F.18.09.08) (Formerly Financial Network Services (Holdings) Pty. Limited)
and Ceased to be a subsidiary w.e.f. 01.03.09) 120 TCS Financial Solutions Australia Pty Limited (Formerly
54 TRIF Constructions Pvt. Ltd. (W.E.F.12.12.08) Financial Network Services Pty. Limited)
55 TRIF Erectors Pvt. Ltd. (W.E.F.31.12.08) 121 TCS FNS Pty. Limited
56 TRIF Gandhinagar Projects Pvt. Ltd. 122 TCS Iberoamerica SA
57 TRIF Hyderabad Projects Pvt. Ltd. 123 TCS Inversiones Chile Limitada
58 TRIF Infrastructure Pvt. Ltd. 124 TCS Italia SRL
59 TRIF Kochi Projects Pvt. Ltd. 125 TCS Management Pty Ltd.
60 TRIF Kolkata Projects Pvt. Ltd. 126 TCS Solution Center S.A.
61 TRIF Mega Projects Pvt. Ltd (W.E.F.31.12.08) 127 WTI Advanced Technology Ltd.
62 TRIF Modern Superstructures Pvt. Ltd. (W.E.F.31.12.08) D Key Management Personnel (Managing Director)
63 TRIF Property Development Pvt. Ltd. 1 Dr Mukund Govind Rajan (from Feb 28, 2008)
64 TRIF Real Estate and Development Pvt. Ltd. 2 Charles Anthony (Upto Feb 29, 2008)
16. Derivatives
As at Mar 31, 2009USD in Rs. in
Millions Crores
94.50 479.28
- -
94.50 479.28
80.30 407.18
As at Mar 31,2009USD in Rs. in
Millions Crores
15.81 80.17
50.62 256.74
66.43 336.91
March 31,200917 Earnings Per Share Data
169.94
1,897,100,866
10
(0.90)
18. Quantitative details of principal items of goods traded(Starter Kits):
Quantity Value(Nos.) Rs. in Crores
19.
i) Outstanding derivatives:
a) Forward Contracts
b) Currency options for hedging
of foreign currency exposure
Total
c) Interest Rate Swaps
ii) The mark to market loss of outstanding currencyoptions and interest rate swaps as at the year-endaggregate to Rs.Nil.
iii) The foreign currency exposure that are not hedgedby derivative instruments:
FCCB
Vendor payables
i) Loss afterTax (Rs. in Crores)
ii) Weighted average number ofshares outstanding
iii) NominalValue of Equity Shares (Rs.)
iv) Basic and Diluted Earningsper Share (Rs.)
In calculating the earnings per share the effect of dilutionon account of outstanding ESOPs and FCCBs of theParent Company is ignored since results are anti- dilutive.
a) Opening Stock 603678 2.21b) Purchases 2935085 9.16c) Sales 2864615 18.78d) Closing Stock 674148 2.01
Following units have been purchased and redeemed bythe Parent Company during the year ended March 31,2009:
ICICI Prudential
Institutional Liquid Plan-
Super Inst.Growth 7701668 10 10
(including redemption premium)
No.of Face CostUnits Value (Rs.) (Rs. In
Crores)
HDFC Cash Mgt Fund -
Savings Plan Growth 20852562 10 37
20. Managerial Remuneration
2008-09
Rs. in Crores
1.11
0.06
0.68
Total 1.85
2008-09
Rs. in Crores
0.03
i) Managing Director
Salaries
Contribution to Provident
and other Fund
Monetary value of perquisites
Note:
a) 2008-09 figures include Rs.0.77 Crores paidduring the year for 2007-08 on account ofbonus / performance pay
b) Managerial remuneration for 2008-09 includesRs.0.77 Crores paid to previous ManagingDirector.
ii) Non-executive Directors
Directors' Sitting Fees
21.
22.
23.
The Parent Company commenced provision of mobileservices using CDMA technology in the year 2003.Currently, the Parent Company provides fixed wirelesstelephony services using the erstwhile Time DivisionMultiple Access (TDMA) technology to certain selectedVillage Public Telephone (VPT) customers only. Since theerstwhile TDMA technology has become obsolete, theParent Company has during the previous year decided todispose off the fixed assets pertaining to TDMAtechnology except for those being utilized to service theaforesaid VPT Customers, aggregating to Rs.610.75Crores (Net block Rs.4.64 Crores) {including those lying incapital inventory aggregated to Rs.13.81 Crores (NetBlock Nil)}. Accordingly the said assets were retired fromactive use and transferred to 'Assets awaiting disposal', atan estimated realisable value of Rs.2.30 Crores in theprevious year, of which during the current year the ParentCompany has written off assets aggregating to Rs.1.20Crores being not realizable.
The Parent Company, during the year, has identifiedcertain Network Interface Units (NIU's), which have beendisconnected and are not in use (including not retrieved)and also have been fully depreciated in the books ofaccount. The management, having regard to the presentcondition of the said NIUs, their future usability and thefact that these NIUs have been fully depreciated, havedecided to write-off the same. Accordingly the said NIU'saggregating Rs.368.58 Crores (cost) have been written offduring year and removed from the block of fixed assets.
The Parent Company during the previous year, has beengranted approval by DoT for providing telecommunicationservices using GSM technology under the terms of theexisting Unified Access Services Licenses. The amountspaid towards the related license fees aggregatingRs.392.66 Crores have been capitalised as intangible
75
76
assets. The Parent Company has already been allottedtrial Spectrum by DoT for Mumbai Service Area,Maharashtra and Goa Service Area.
In accordance with it's accounting policy, the ParentCompany will commence amortization of the license feespaid, on commencement of GSM operations and willamortise such fees over the remaining life of therespective license.
The borrowing costs attributable to the GSM operationsaggregating Rs.45.63 Crores (Previous Year Rs.8.63Crores) have been capitalized during the year inaccordance with AS 16 on 'Borrowing Costs' and includedunder CapitalWork in Progress.
As per information available with the Group, none of thecreditors has confirmed that they are registered under theMicro, Small and Medium enterprises Development Act,2006. The disclosure regarding dues to such creditors isgiven accordingly in Schedule 11.
With effect from April 1, 2008, the Parent Company hasdecided to recognise the upfront (Universal ServiceObligation) USO subsidy granted by Department ofTelecommunication over the remaining validity period ofthe scheme/agreement as against the method ofrecognizing the said revenue over a period of 5 years fromthe date of receipt from DoT. Accordingly, "Other Income"for the year is higher by Rs.17.95 Crores, and "Loss aftertax " is lower by the like amount.
The Central Government, vide notification dated March31, 2009, amended AS 11 on ´The Effect of Changes inForeign Exchange Rates´, whereby, companies havebeen given an option to account for exchange differencesarising on reporting of long-term foreign currencymonetary items (assets/liabilities) in so far as they relate toacquisition of a depreciable capital asset, to be added/deducted from the cost of the asset and for others to beaccumulated in a separate reserve to be amortized overthe balance life of the asset/liability but not beyond March31, 2011. The aforesaid option is effective withretrospective effect in respect of accounting periodscommencing on or after December 7, 2007. The ParentCompany has exercised this option and has given thefollowing effect in the accounts for the aforesaid:
a) Exchange gain (net of depreciation) relating to yearended March 31, 2008 adjusted in debit balance ofProfit and Loss account and Plant and Machineryaggregating to Rs.18.76 Crores.
b) Exchange loss relating to year ended March 31,2009 adjusted against carrying value of fixed assetsaggregating to Rs.49.45 Crores.
Due to the aforesaid option exercised by the ParentCompany, the depreciation for the year is higher by Rs.0.88 Crores and the loss for the year is lower by Rs. 48.57
24.
25.
26.
Crores and the amount (after the aforesaid adjustments)of Plant and Machinery remaining to be amortised as atMarch 31, 2009 aggregates to Rs.29.81 Crores.
The Charges on the Assets of CITL for Short Term Loantaken from United Bank of India for Rs 130 Crores are inthe process of being created.
The appointment of a Manager and a whole timeSecretary for the subsidiary Company are under process.
The accumulated losses of the Group at the close of theyear have exceeded its paid-up capital and reserves.This,however, is not uncommon for telecommunication serviceproviders in their initial years of commercial operations,due to high operation costs of heavy infrastructure andhigh capital requirement for building the network. TheGroup is consistently making cash profits, and has beenable to grow its subscriber base and network. The ParentCompany is in advanced stages of financial closure forproposed GSM and other Network Roll out and would beable to meet its further funding requirements. The ParentCompany in the previous year had also paid Rs.392.66Crores as license fees for providing services using GSMtechnology under the existing licenses and expects to roll-out the related services during the next financial year.Based on the foregoing considerations, the group isconfident of it's ability to continue in business as a goingconcern and the accounts have accordingly beenprepared on this basis.
The Parent Company acquired CITL in the current yearand hence there are no figures on a consolidated basis forthe previous year.
As per our attached report of even date
27..
28.
29.
30.
Signatures to Schedules '1' to '17’
For Deloitte Haskins & Sells For and on behalf of the Board
A.B. Jani Kishor A. Chaukar
Chartered Accountants
Partner (Chairman)
(Managing Director)
Dated: May 11, 2009
Dr. Mukund Rajan
S. Venktesan
Madhav J. Joshi
(Chief Financial Officer)
(Chief Legal Officer andCompany Secretary)
Place : Mumbai Place : MumbaiDated: May 11, 2009
th14 Annual Report 2008-2009
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2009
April 1, 2008 to
March 31, 2009
Rs. in Crores
A Cash flows from operating activities
Net Loss before tax (168.73)
Adjustments for :
Depreciation/Amortisation 463.13
Loss on Fixed assets sold/written off (Net) 0.34
Profit on redemption of units (Current Investment) (0.03)
Foreign exchange loss (Net) 36.13
Finance and Treasury charges (Net) 269.58
769.15
Operating profit before working capital changes 600.42
Increase in Sundry Debtors (51.19)
Increase in Loans and Advances (104.79)
Decrease in Inventory 0.21
Decrease in Current liabilities and Provisions (55.82)
Cash Generated from operations 388.83
Fringe Benefit Tax paid (1.21)
Net Cash generated from operating activities 387.62
B Cash flow from investing activities
Purchase of Fixed Assets (806.99)
Proceeds from sale of Fixed Assets 1.32
Acquisition in Subsidiary (0.01)
Profit on redemption of units (Current Investment) 0.03
Purchase of Current Investments (10.00)
Net Cash used for investing activities (815.65)
C Cash flow from financing activities
Repayment of Long term borrowings (213.22)
Proceeds from Short term borrowings 1,312.33
Repayment of Short term borrowings (539.00)
Proceeds from Acceptance and Cash Credit ( Net) 151.27
Finance and Treasury charges paid (290.33)
Net cash generated from financing activities 421.05
Net decrease in cash or cash equivalents (6.98)
Cash and cash equivalents at beginning of the year 34.47
Cash and cash equivalents at end of the year 27.49
(6.98)
Notes to Cash Flow Statement
1.
2. Purchase of Fixed Assets are inclusive of movements in Capital Work in Progress between the commencement and end of the year.
3. Conversion of Foreign Currency Convertible Bonds into Equity Shares are not considered in the Cash Flow Statement.
As per our attached report of even date
For Deloitte Haskins & Sells For and on behalf of the Board
Chartered Accountants
A.B.Jani Dr.Mukund Rajan
Partner ( )Chairman (Managing Director)
S. Venkatesan Madhav J. Joshi
(Chief Financial Officer) (Chief Legal Officer and
Place: Mumbai Place: Mumbai Company Secretary)
Date: May 11, 2009 Date: May 11, 2009
Components of Cash and Cash Equivalents includes Cash, bank balances in Current and Term Deposit Accounts (Refer Schedule 7 to theBalance Sheet).
77
Kishor A. Chaukar
78
th14 Annual Report 2008-2009
Statement pursuant to Section 212 of the Companies Act, 1956, related to Subsidiary Companies
Name of the subsidiary 21st Century Infra Tele Limited
1. Financial year of the subsidiary ended on 31st March, 2009
2. Shares of the subsidiary held by the Company on the above date:
(a) Number 75,000,000
Face value Equity Shares of Rs. 10 each
(b) Extent of holding 100%
3. Net aggregate amount of profits/(losses) of the subsidiary for the above
financial year of the subsidiary so far as they concern members of the
Company :
(a) dealt with in the accounts of the Company for the year ended
31st
March, 2009 (Rs. Lakhs) Nil
(b) not dealt with in the accounts of the Company for the year ended
31st
March, 2009 (Rs. Lakhs) (1,026.14)
4. Net aggregate amount of profits/(losses) for previous years of the subsidiary,
since it became a subsidiary so far as they concern members of the Company :
(a) dealt with in the accounts of the Company for the year ended
31st
March, 2008 (Rs. Lakhs) #
(b) not dealt with in the accounts of the Company for the year ended
31st
March, 2008 (Rs. Lakhs) #
# Prior year figures have not been disclosed in the above statement as the subsidiary was acquired on July 1, 2008.
For and on behalf of the Board
Dr.Mukund Rajan
( )Chairman (Managing Director)
S. Venkatesan Madhav J. Joshi
(Chief Financial Officer) (Chief Legal Officer and
Place: Mumbai
Company Secretary)
Date: May 11, 2009
Kishor A. Chaukar
DIRECTORS' REPORT
Dear Members,
(Amount in Rupees)
The Directors have pleasure in presenting the 1 Annual Reporttogether with the audited financial statements of the Companyfor the year ended June 30, 2008 and other accompanyingreports, notes and certificates.
The financial results of the Company's operations during theyear are given below:
Your Company has applied for IP-1 Registration. Once theRegistration is obtained, the Company would capitalize on theopportunity created by the increased industry focus oninfrastructure sharing. The Company would acquire PassiveTower Infrastructure from its holding Company i.e TataTeleservices (Maharashtra) Limited (TTML).
In view of losses, the Directors regret their inability torecommend any dividend for the year under consideration.
No appropriations are proposed to be made for the year underconsideration.
Total paid-up share capital of the Company is Rs. 1,00,000/-divided into 10,000 equity shares of Rs.10/- each.
Mr. Madhav Joshi was appointed as First director of theCompany. Mr. S. Venkatesan was appointed as an AdditionalDirector with effect from July 3, 2008.Mr.ShankarVaradharajanwas appointed an Additional Director with effect from July 10,2008. As per the provisions of the Companies Act, 1956 these
st
Financial Results
The Company's Performance
Dividend
Appropriations
Share Capital
Directors
Directors hold office only upto the date of the forthcomingAnnual General Meeting of the Company. The Company hasreceived notices under Section 257 of the Act along withrequisite deposit, in respect of the above persons, proposingtheir appointment as Directors of the Company. Accordingly,resolutions seeking the approval of the Members for theappointment of Mr. Madhav Joshi, Mr. S. Venkatesan & Mr.Shankar Varadharajan as Directors of the Company have beenincorporated in the Notice of the forthcoming Annual GeneralMeeting along with brief details about them. The Boardrecommends these appointments in the interests of theCompany.
None of the employees of the Company was in receipt ofremuneration which comes under the provisions of the Section217(2A) of the Companies Act, 1956 read with theCompanies (Particulars of Employees) Rules, 1975.
M/s PKF Sridhar & Santhanam, Chartered Accountants, thepresent statutory auditors retire at this meeting and are eligiblefor re-appointment. Your directors recommend their re-appointment.
Pursuant to the provisions of Section 217(2AA) of theCompanies Act, 1956, the Directors confirm that:
1. In the preparation of the annual accounts, the applicableaccounting standards have been followed and there areno material departures;
2. They have, in the selection of the accounting policies,consulted the Statutory Auditors, and have applied themconsistently and made judgements and estimates that arereasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of thefinancial year and of the loss of the Company for theperiod;
3. They have taken proper and sufficient care, to the best oftheir knowledge and ability, for the maintenance ofadequate accounting records in accordance with theprovisions of the Companies Act, 1956, for safeguardingthe assets of the Company and for preventing anddetecting fraud and other irregularities;
4. They have prepared the annual accounts on a goingconcern basis.
The Company has not accepted any deposits within themeaning of Section 58A of the Companies Act, 1956 and therules made thereunder.
The disclosures as required under the Companies (Disclosureof Particulars in the Report of the Board of Directors) Rules,1988 are given below:
Particulars of Employees
Auditors
Directors' Responsibility Statement
Fixed Deposits
Conservation of Energy, Technology Absorption andForeign Exchange Earnings and Outgo
79
Particulars As at
June 30, 2008
Income -
Total Income -
Expenditure (42,223.00)
Earnings Before Interest, Depreciation, (42,223.00)
Tax and Amortisation (EBIDTA)
Finance & Treasury Charges (Net) (337.00)
Depreciation -
Loss before Extraordinary item and tax (42,560.00)
Extraordinary item -
Loss before tax (42,560.00)
Fringe Benefit tax -
Loss after tax (42,560.00)
21ST CENTURY INFRA TELE LIMITED
(i) Energy Conservation: The Company has not yetcommenced its operations. The Company would make aconscious effort on energy conservation once theoperations are started.
(ii) Technology Absorption: The Company has not importedany technology. The Company has not yet establishedseparate R & D facilities.
(iii) Foreign Exchange Earnings and Outgo:(Rs.)
Your Directors wish to place on record their sincere appreciationof the assistance financial institutions, banks, vendors,Government and others associated with the activities of theCompany.
MumbaiDate:October 10, 2008 Director Director
Acknowledgements
For and on behalf of the Board of Directors
S.Venkatesan Madhav Joshi
4. Further we report that:
(i) We have obtained all the information andexplanations, which to the best of our knowledgeand belief were necessary for the purposes of ouraudit;
(ii) In our opinion, proper books of account as requiredby law have been kept by the Company so far asappears from our examination of those books;
(iii) The balance sheet, profit and loss account dealt withby this report are in agreement with the books ofaccount;
(iv) In our opinion, the balance sheet, profit and lossaccount dealt with by this report comply with theaccounting standards referred to in sub-section (3C)of Section 211 of the Companies Act, 1956;
(v) The Company being a private limited Company, theprovision of Section 274(1)(g) of the Companies Act,1956 are not applicable.
(vi) In our opinion and to the best of our information andaccording to the explanations given to us, the saidaccounts give the information required by theCompanies Act, 1956, in the manner so requiredand give a true and fair view in conformity with theaccounting principles generally accepted in India:
in the case of the balance sheet, of the state ofaffairs of the Company as at June 30, 2008;
in case of the profit and loss account, of theloss for the period 28.06.07 to 30.06.08.
Chartered Accountants
Place:MumbaiDate:September 2008.
(a)
(b)
For PKF Sridhar & Santhanam
(Mythily S)Partner
1, M.No.:205742
80
Current Year
Earnings Nil
Outgo Nil
Capital Goods Nil
th14 Annual Report 2008-2009
21ST CENTURY INFRA TELE LIMITED
AUDITORS’ REPORT
To
The Members of 21st Century InfraTele Private Limited
1. We have audited the attached balance sheet of 21Century Infra Tele Pvt. Ltd., as at June 2008, the Profitand Loss account for the period 28.06.07 to 30.06.08.These financial statements are the responsibility of the
ompany's management. Our responsibility is to expressan opinion on these financial statements based on ouraudit.
2. We conducted our audit in accordance with the auditingstandards generally accepted in India. Those Standardsrequire that we plan and perform the audit to obtainreasonable assurance about whether the financialstatements are free of material mis-statement. An auditincludes examining, on a test basis, evidence supportingthe amounts and disclosures in the financial statements.An audit also includes assessing the accountingprinciples used and significant estimates made bymanagement, as well as evaluating the overallfinancial statement presentation. We believe that ouraudit provides a reasonable basis for our opinion.
3. Company’s (Auditors’ Report) Order, 2003 issued by theCentral Government of India in te
st30,
C
rms of Sub-Section (4A)of Section 227 of the Companies Act, 1956, is notapplicable to this Company.
Particulars
As at
June 30, 2008
Rs.
SOURCES OF FUNDS
Shareholders' Funds
Share Capital 1 100,000.00
Total 100,000.00
APPLICATION OF FUNDS
Current Assets, Loans and
Advances
Bank Balance with Scheduled
Bank in Current Account 2 99,663.00
Less : Current Liabilities and
Provisions
Current Liabilities 3 42,223.00
Net Current Assets 57,440.00
Profit and Loss Account 42,560.00
Total 100,000.00
Significant Accounting Policies andNotes to Financial Statements 4
Schedule
As per our attached report of even date
For PKF Sridhar & Santhanam For and on behalf of the Board
Chartered Accountants
Mythily S S. Venkatesan Madhav J. Joshi
Partner Director Director
Place: Mumbai Place: MumbaiDate: September 1, 2008 Date: September 1, 2008
Schedule 2007-08
Rs.
Income -
Expenditure
Audit Fees 13,483.00
Listing Fees 28,740.00
Loss before Finance and 42,223.00
Treasury charges,Depreciation and Tax
Finance and Treasury Charges (Net) 337.00
Depreciation -
Loss before Tax 42,560.00
Tax -
Loss after tax 42,560.00
Balance at Commencement -
Balance carried to Balance Sheet 42,560.00
Significant Accounting Policies and
Notes to Financial Statements 4
As per our attached report of even date
For PKF Sridhar & Santhanam For and on behalf of the Board
Chartered Accountants
Mythily S S. Venkatesan Madhav J. Joshi
Partner Director Director
Place: Mumbai Place: MumbaiDate: September 1, 2008 Date: September 1, 2008
PROFIT AND LOSS ACCOUNT FOR THE PERIODFROM JUNE 28, 2007 TO JUNE 30, 2008
BALANCE SHEET AS AT JUNE 30, 2008
81
SCHEDULE 4: NOTES TO ACCOUNTS
21ST CENTURY INFRA TELE PRIVATE LIMITED
SIGNIFICANT ACCOUNTING POLICIES AND NOTES TOFINANCIAL STATEMENTS
1. Company background
2. Significant Accounting Policies
a. Basis of preparation of financial statements
b. Accounting basis and convention
c. Revenue recognition
d. Provision and Contingent Liabilities
3. Payments to Auditors: for the period 28.6.07 to 30.6.08
(Rs. In Lakhs)0.13
4.
5.
6.
21 CENTURY INFRA TELE PRIVATE LIMITED wasincorporated on June 2 , 2007. The ompany is formed toprovide passive infrastructure support to telecommunicationservice provider.The ompany has become the wholly ownedsubsidiary of Tata Teleservices (Maharashtra) Limited w.e.fJuly 2008.
The accounts have been prepared to comply in all materialaspects with applicable accounting principles in India, theAccounting Standards notified in the Companies (AccountingStandards) Rules 2006 and relevant provisions of theCompanies Act, 1956.
The financial statement is prepared under historical costconvention on an accrual basis and complies with Section 211(3C) of the Companies Act, 1956.
All income and expenditure are accounted for on accrualbasis.
Provisions are recognized when there is a present obligationas a result of past events where it is probable that there will beoutflow of resources to settle the obligation and when areasonable estimate of amount of the obligation can be made,when any such present obligation cannot be measured orwhere a realistic estimate of the obligation cannot be made,contingent liability are recognized.
Contingent liabilities are also recognized when there is apossible obligation arising from past events due to occurrenceor non-occurrence of one or more certain future events notwholly within the control of the Company.
Audit fees(inclusive of service tax)
The Company does not owe any moneys to micro and smallenterprises as on June 30, 2008.
The Company does not have any derivative transactions.
This being the first year, there are no previous years figures.
As per our attached report of even date
ST8 C
C
1,
For PKF Sridhar & Santhanam For and on behalf of the Board
Mythily S S.Venkatesan Madhav J.Joshi
Chartered Accountants
Partner Director Director
Place:Mumbai Place:MumbaiDate: Date:September 1, 2008September 1, 2008
As at
June 30, 2008
Rs.
SCHEDULE - 1
SHARE CAPITAL
Authorised
100,000 Equity Shares of Rs.10/- each 1,000,000.00
1,000,000.00
Issued and Subscribed
10,000 Equity Shares of Rs.10/- eachfully paid-up
100,000.00
100,000.00
SCHEDULE - 2
CASH AND BANK BALANCES
Balance with Scheduled Banks in
- Current Accounts (Union Bank of India) 99,663.00
99,663.00
SCHEDULE - 3
Current Liabilities
Acceptances
Sundry Creditors
Dues to Micro, mediumand Small Enterprises
-
- Others 42,223.00
42,223.00
SCHEDULES FORMING PART OF THE BALANCE SHEETAS AT JUNE 30, 2008
82
th14 Annual Report 2008-2009
21ST CENTURY INFRA TELE LIMITED
-
DIRECTORS' REPORT
Dear Members,
(Rs. in Lakhs)
The Directors have pleasure in presenting the 2nd AnnualReport together with the audited financial statements of theCompany for the period ended March 31, 2009 and otheraccompanying reports, notes and certificates.
The financial results of the Company's operations during theyear are given below:
During the year, the Company obtained Infrastructure ProviderCategory-1 (IP-1) registration from the Department ofTelecommunications (DoT) for establishing and maintaining theassets such as dark fibers, duct space and towers. No Licencefee is payable.
The holding Company, Tata Teleservices (Maharashtra) Limited(TTML) sold the passive infrastructure business to theCompany on slump sale basis, the infrastructure businessincluding assets, liabilities and other obligations effectiveSeptember 30, 2008.
The Company is in discussions with all major telecom operatorsincluding the new licencees for sharing of towers and improvingits tenancy ratios. The current tenancy ratio is 1.32. TTML'sGSM project is expected to help Company in rollout of towerssignificantly.
During the year, the Company increased its authorized equityshare capital from Rs. 10 lakhs to. Rs. 13,000 lakhs and paid upequity capital of the Company from Rs. 1 Lakh to Rs. 7,500lakhs.
Mr. Haridev Khosla was appointed as Additional Director witheffect from March 25, 2009.
Financial Results
Registration for Infrastructure Provider Category with theDepartment ofTelecommunications
Acquisition of Passive Infrastructure Undertaking
Sharing of towers
Authorised & Paid-up Equity Share Capital
Directors
In accordance with the provision of the Companies Act, 1956(Act), and the Company's Articles of Associations, Mr. ShankarVaradharajan, Director retire by rotation at the ensuing AnnualGeneral Meeting and being eligible, offer himself for re-appointment
Notice has been received from a member proposing the nameof Mr.Haridev Khosla as a Director of the Company.
M/s PKF Sridhar & Santhanam, Chartered Accountants, thepresent statutory auditors retire at this meeting and are eligiblefor re-appointment. The Directors recommend their re-appointment.
In view of losses, the Directors regret their inability torecommend any dividend for the year under consideration.
Mr.Haridev KhoslaMr.Madhav JoshiMr.ShankarVaradharajanMr.S.Venkatesan (Invitee)
None of the employees of the Company was in receipt ofremuneration which comes under the provisions of the Section217(2A) of the Act, read with the companies (Particulars ofEmployees) Rules 1975.
Pursuant to the provisions of Section 217(2AA) of the Act, theDirectors confirm that:
1. In the preparation of the annual accounts, the applicableaccounting standards have been followed and there areno material departures;
2. They have, in the selection of the accounting policies,consulted the Statutory Auditors, and have applied themconsistently and made judgements and estimates that arereasonable and prudent so as to give a true and fair view ofthe state of affairs of the Company at the end of thefinancial year and of the loss of the Company for theperiod;
3. They have taken proper and sufficient care, to the best oftheir knowledge and ability, for the maintenance ofadequate accounting records in accordance with theprovisions of the Act, for safeguarding the assets of theCompany and for preventing and detecting fraud andother irregularities;
4. They have prepared the annual accounts on a goingconcern basis.
The Company has not accepted any deposits within themeaning of Section 58A of the Act, and the rules madethereunder.
The disclosures as required under the Companies (Disclosure
.
Auditors
Dividend
Audit Committee Members
Particulars of Employees
Directors' Responsibility Statement
Fixed Deposits
Conservation of Energy, Technology Absorption andForeign Exchange Earnings and Outgo
83
Particulars 2008-09
Income 1,976
Total Income 1,976
Expenditure 1,278
Earnings Before Interest, Depreciation, 698
Tax and Amortisation (EBIDTA)
Finance & Treasury Charges (Net) 90
Depreciation 1,634
Loss before Extraordinary item and tax (1,026)
Extraordinary item -
Loss before tax (1,026)
Fringe Benefit tax -
Loss after tax (1,026)
of Particulars in the Report of the Board of Directors) Rules,1988 are given below:
(i) Energy Conservation: Electricity is used for the working ofthe Company's network infrastructure equipments. TheCompany regularly reviews power consumption patternsacross its networks and implements requisiteimprovements/changes in the network or processes inorder to optimize power consumption and thereby achievecost savings.
(ii) Technology Absorption: The Company has not importedany technology. The Company has not yet establishedseparate R & D facilities.
(Iii) Foreign Exchange Earnings and Outgo:
Your Directors wish to place on record their sincere appreciationof the assistance provided by the financial institutions, banks,vendors, employees, Government and others associated withthe activities of the Company.
Acknowledgements
MumbaiDate:June 24, 2009 Director Director
For and on behalf of the Board of Directors
S.Venkatesan Madhav J. Joshi
AUDITORS’ REPORT
TOTHE MEMBERS OF21st CENTURY INFRATELE LIMITED
1. We have audited the attached Balance Sheet ofas at
March 31, 2009, the Profit and Loss Account and the CashFlow Statement for the year ended on that date annexedthereto. These financial statements are the responsibility ofthe Company's Management. Our responsibility is toexpress an opinion on these financial statements based onour audit.
2. We conducted our audit in accordance with auditingstandards generally accepted in India. Those Standardsrequire that we plan and perform the audit to obtainreasonable assurance about whether the financialstatements are free of material misstatement. An auditincludes examining, on a test basis, evidence supporting theamounts and disclosures in the financial statements. Anaudit also includes assessing the accounting principles usedand significant estimates made by the Management, as wellas evaluating the overall financial statement presentation.We believe that our audit provides a reasonable basis for ouropinion.
3. As required by Companies (Auditor's Report) Order, 2003issued by the Central Government in terms of Section227(4A) of the Companies Act, 1956, we enclose in theAnnexure, a statement on the matters specified inparagraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to above,we report that:
i. We have obtained all the information and explanations,which to the best of our knowledge and belief werenecessary for the purposes of our audit;
ii. In our opinion, proper books of account as required by lawhave been kept by the Company so far as appears from ourexamination of those books;
iii. The Balance Sheet, Profit and Loss Account and Cash FlowStatement dealt with by this report are in agreement with thebooks of account;
iv. In our opinion, the Balance Sheet and Profit & Loss Accountdealt with by this report comply with the accountingstandards referred to in Sub-Section (3C) of Section 211 ofthe Companies Act, 1956.
v. On the basis of written representations received from thedirectors as on March , 2009 and taken on record by theBoard of Directors, we report that none of the directors isdisqualified as on , 2009 from being appointed as adirector in terms of clause (g) of ub- ection (1) of ection274 of the Companies Act, 1956.
vi. In our opinion and to the best of our information andaccording to the explanations given to us, the said accounts,read with significant accounting policies and notes thereon,give the information required by the Companies Act, 1956, inthe manner so required and give a true and fair view inconformity with the accounting principles generallyaccepted in India:
(a) In the case of the Balance Sheet, of the state of affairs of theCompany as at , 2009;
21st
CENTURY INFRA TELE LIMITED (“The Company”)
31
March31S S S
March31
84
2008-09
Earnings Nil
Outgo Nil
Capital Goods Nil
th14 Annual Report 2008-2009
21ST CENTURY INFRA TELE LIMITED
Particulars
(b) In the case of the Profit and Loss Account, of the loss for theyear ended on that date;and
(c) In the case of the Cash Flow Statement, of the cash flows forthe year ended on that date.
Chartered Accountants
PartnerMembership No.:206190Mumbai, dated:May 8, 2009
For PKF SRIDHAR & SANTHANAM
Radhika Hariharan
ANNEXURE TO THE AUDITORS’ REPORT
Re: 21st Century Infra Tele Limited
(Referred to in paragraph 3 of our report of even date)
i. The nature of the Company's activities is such the clauses(xiii) and (xiv) of paragraph 4 of the Companies (Auditors’Report) Order, 2003 are not applicable to the Company forthe year.
ii. In respect of its fixed assets:
a. The Company has maintained proper records showing fullparticulars, including quantitative details and situation offixed assets.
b. All fixed assets have not been verified by the managementduring the year but there is a regular program of verificationwhich, in our opinion, is reasonable having regard to the sizeof the Company and the nature of it's assets. No materialdiscrepancies were noticed on such verification.
c. The Company has not disposed off a substantial part of fixedassets during the year.
iii. The Company is providing services and not having anyinventory, accordingly the sub clauses (a) to (c) of clause (ii)of the order are not applicable to the Company.
iv. The Company has not granted or taken any loans, securedor unsecured to/from companies, firms or other partiescovered in the register maintained under section 301 of theCompanies Act, 1956 and accordingly the sub clauses (a) to(g) of clause (iii) of the Order are not applicable to theCompany.
v. In our opinion, and according to the information andexplanations given to us, there is an adequate internalcontrol system commensurate with the size of the Companyand the nature of its business with regard to the purchase offixed assets and sale of services. During the course of ouraudit we have not observed any continuing failure to correctmajor weakness in the internal control system.
vi. According to the information and explanations given to us,no particulars of contracts or arrangements referred inSection 301 of the Companies Act, 1956 are needed to beentered in the register maintained under Section 301 underthe Companies Act, 1956 as none of the directors areholding 2% or more shares of the Company.Accordingly subclause (b) of clause (v) of the Order is not applicable to theCompany.
vii. The Company has not accepted any deposits from thepublic.
viii. According to the information and explanations given to us,the paid up capital and free reserve as at the
85
commencement of the financial year concerned is notexceeding Rs. 50 Lakhs and the average annual turnover isnot exceeding Rs. 500 Lakhs for a period of threeconsecutive financial years immediately preceding thefinancial year concerned, the clause (vii) of the Order is notapplicable to the Company.
ix. According to the information and explanations given to us,the maintenance of cost records has not been prescribed bythe Central Government under Section 209(1)(d) of theCompanies Act, 1956.
x. According to the information and explanations given to us, inrespect of statutory and other dues:
a) The Company has generally been regular in depositingundisputed statutory dues in respect of Provident Fund,Employees State Insurance, Income Tax, Sales Tax, WealthTax, Service Tax, Custom Duty, Cess and any other materialstatutory dues with the appropriate authorities during theyear.
b) According to the information and explanations given to us,no dues of Sales Tax/Income Tax/Custom Duty/WealthTax/Service Tax/Excise Duty and Cess have not beendeposited on account of any dispute.
xi. The Company has been registered for a period less than fiveyears; accordingly the clause (x) of the Order is notapplicable to the Company.
xii. In our opinion and according to the information andexplanations given to us, the Company has not defaulted inrepaying dues payable to a financial institution and banks.
xiii. According to the information and explanations given to us,the Company has not granted any loans and advances onthe basis of security by way of pledge of shares, debenturesand other securities.
xiv. According to the information and explanations given to us,the Company has not given any guarantee for loans taken byothers from bank or financial institutions.
xv. According to the information and explanations given to us,the term loans availed by the Company were, prima facie,applied during the year for the purpose for which the loanswere obtained.
xvi. According to the information and explanations given to us,the Company has not made any preferential allotment ofshares to parties and companies covered in the registermaintained under section 301 of the Companies Act, 1956.
xvii. The Company has not issued any debentures during theyear.
xviii. The Company has not raised any money by way of publicissues during the year.
xix. According to the information and explanations given to us,no fraud on or by the Company was noticed or reportedduring the year.
For PKF SRIDHAR & SANTHANAM
Radhika Hariharan
Chartered Accountants
PartnerMembership No.:206190Mumbai, dated:May 8, 2009
86
BALANCE SHEET AS AT MARCH 31, 2009
As at As at
March 31, 2009 June 30, 2008
(Rs in Lakhs) (Rs in Lakhs)
SOURCES OF FUNDS
Shareholders' Funds
Share Capital 1 7,500.00 1.00
Loan Funds
Secured Loan 2 13,000.00 -
Unsecured Loan 3 10,200.00 -
Total 30,700.00 1.00
APPLICATION OF FUNDS
Fixed Assets 4
Gross Block 31,301.00 -
Less : Accumulated Depreciation 1,634.17 -
Net Block 29,666.83 -
Capital Work-in-progress 1,180.23 -
30,847.06 -
Investments 5 1,000.00 -
Current Assets, Loans and Advances
Cash at Bank 6 1.36 1.00
Sundry Debtors 7 1,194.09 -
Loans and Advances 8 2,072.78 -
3,268.23 1.00
Less : Current Liabilities and Provisions 9
Current Liabilities and Provisions 5,441.68 0.41
Provisions 0.16 -
Net Current Assets (2,173.61) 0.59
Profit and Loss Account 1,026.55 0.41
Total 30,700.00 1.00
Significant Accounting Policies and Notes to Financial Statements 13
Schedule
As per our attached report of even date
For PKF Sridhar & Santhanam For and on behalf of the Board
Chartered Accountants
Radhika Hariharan S. Venkatesan H. D. Khosla
Partner (Director) (Director)
Place: Mumbai Place: Mumbai
Date: May 8, 2009 Date: May 8, 2009
Sujir Nayak
(Manager)
th14 Annual Report 2008-2009
21ST CENTURY INFRA TELE LIMITED
87
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2009
Schedule July 1, 2008 to June 28, 2007 to
March 31, 2009 June 30, 2008
(Rs. in Lakhs) (Rs. in Lakhs)
Income
Infrastructure Sharing Revenue 10 1,976.23 -
Expenditure
11Operation and Other Expenses (Net) 1,278.42 0.41
Profit/(Loss) before Finance and Treasury charges, 697.81 (0.41)
Depreciation and Tax
Finance and Treasury Charges. 12 89.78 -
Depreciation/Amortisation 1,634.17 -
Loss before Tax (1,026.14) (0.41)
Tax - -
Loss after tax (1,026.14) (0.41)
Balance at Commencement (0.41) -
Balance carried to Balance Sheet (1,026.55) (0.41)
Earnings Per Share - Basic (Rs.) (38.40) (4.11)
Par Value (Rs.) 10 10
Significant Accounting Policies and Notes to Financial Statements 13
As per our attached report of even date
For PKF Sridhar & Santhanam For and on behalf of the Board
Chartered Accountants
Radhika Hariharan S. Venkatesan H. D. Khosla
Partner (Director) (Director)
Place: Mumbai Place: Mumbai
Date: May 8, 2009 Date: May 8, 2009
Sujir Nayak
(Manager)
88
SCHEDULES FORMING PART OF THE BALANCE SHEET AS AT MARCH 31, 2009
As at As at
March 31, 2009 June 30, 2008
(Rs in Lakhs) (Rs in Lakhs)
SCHEDULE - 1
SHARE CAPITAL
Authorised
130,000,000 (Previous year 100,000) Equity Shares of Rs.10/- each 13,000.00 10.00
13,000.00 10.00
Issued and Subscribed
75,000,000 (Previous year 10,000) Equity Shares of Rs.10/- each fully paid-up 7,500.00 1.00
7,500.00 1.00
Note:
SCHEDULE - 2
SECURED LOANS
From Banks
Term Loans (Refer Note 21 of Schedule 13) 13,000.00 -
13,000.00 -
Notes :
1.
SCHEDULE - 3
UNSECURED LOANS
From Banks
Short Term Loans 10,200.00 -
10,200.00 -
All the above Equity Shares are held by Tata Teleservices (Maharashtra) Limited (Holding Company) and its nominees.
Loans from Bank are secured, pending creation of charges, by either one or more of the following as per terms of the
arrangements with bank:
- by first pari passu mortgage and charge over immovable properties of the Company, both present and future,
- by first pari passu charge by way of hypothecation over all the movable assets of the Company, both present and future,
- by first pari passu charge on all the intangible assets of the Company, both present and future,
- by assignment of IP-1 licence from DoT, Tower Sharing Agreements, Lease Agreements, etc.
- by all the rights, title, interest, benefits, claims and demands whatsoever in the clearances received,
- by assignment of insurance policies,
- by all the rights, title, interest, benefits, claims and demands whatsoever by the Company in any letter of credit, guarantee,
etc. provided in terms of the project documents.
- by pari passu Charge on all the book debts, operating cash flows, revenues, commissions and receivables of the
Company, both present and future,
th14 Annual Report 2008-2009
21ST CENTURY INFRA TELE LIMITED
89
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90
SCHEDULES FORMING PART OF THE BALANCE SHEET AS AT MARCH 31, 2009
As at As at
March 31, 2009 June 30, 2008
(Rs in Lakhs) (Rs in Lakhs)
SCHEDULE - 5
Investments
Non-Trade
Current
- Quoted
ICICI Prudential Liquid Plan Super Inst. Growth Plan - Units of Rs 12.99 each NAV 1,000.00 -
(During the year - 77,01,448.944 units Previous Year - NIL)
(Dividend Reinvested NIL, Sold NIL)
1,000.00 -
SCHEDULE - 6
CASH AND BANK BALANCES
Balance with Scheduled Banks in
- Current Accounts 1.36 1.00
1.36 1.00
SCHEDULE - 7
Sundry Debtors
(Unsecured - Considered good)
Outstanding for a period exceeding six months - -
Others 1,194.09 -
1,194.09 -
SCHEDULE - 8
LOANS AND ADVANCES
(Unsecured - Considered good)
Advances recoverable in cash or in kind or for value to be received 1,518.13 -
Premises and other deposits. 554.65 -
(includes Deposits of Rs.473.33 Lakhs transferred from 2,072.78 -
Tata Teleservices (Maharashtra) Limited (Refer Note 4 of Schedule 13))
SCHEDULE - 9
Current Liabilities and Provisions
Sundry Creditors
Dues to Micro and Small Enterprises - -
Dues to Others 3,637.13 -
Advance from Customer (Refer Note 1 below) 1,189.46 0.41
Deposit from Customer 51.58 -
Other Liabilities (Refer Note 2 below) 563.51 -
5,441.68 0.41
Provisions 0.16 -
5,441.84 0.41
Notes: 1) Advance from Customer is from Tata Teleservices (Maharashtra) Limited (Holding Company)
2) Other liabilities include temperory overdrawn bank balance aggregating to Rs. 425.97 Lakhs (Previous Year NIL)
th14 Annual Report 2008-2009
21ST CENTURY INFRA TELE LIMITED
91
SCHEDULES FORMING PART OFMARCH 31, 2009
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED
July 1, 2008 to June 28, 2007 to
March 31, 2009 June 30, 2008
(Rs. in Lakhs) (Rs. in Lakhs)
SCHEDULE - 10
Income from Infrastructure Sharing
Infrastructure Sharing Revenue (Refer Notes 4 and 5 of Schedule 13) 1,976.23 -
1,976.23 -
SCHEDULE - 11
OPERATION AND OTHER EXPENSES
Network Operation costs
Repairs and Maintenance - Plant and Machinery 352.56 -
(Including Capital Inventory Consumed Rs.0.28 Lakhs)
Power (Net of recoveries Rs. 2,039.82 Lakhs) (Previous Year NIL) 37.48 -
Rent (Net of recoveries Rs. 964.58 Lakhs) (Previous Year NIL) 239.95 -
(Refer Note 18 of Schedule 13)
Rates and Taxes (Net of recoveries Rs. 21.24 Lakhs) (Previous Year NIL) 287.32 -
Insurance - Network 5.55 -
Security Charges 218.99 -
Others 17.79 -
1,159.64 -
Administrative and Other expenses
Repairs and Maintenance - Others 2.89 -
Rates & Taxes 73.52 -
Legal & Professional Fees 26.59 0.29
Audit Fees 4.10 0.12
Electricity 0.15 -
Loss on retirement of Fixed Assets 0.08 -
Miscellaneous expenses 3.00 -
110.33 0.41
Payments to and Provisions for Employees
Salaries and Bonus 8.45 -
(Refer Note 18 of Schedule 13)
8.45
1,278.42 0.41
SCHEDULE - 12
Finance and Treasury Charges
Interest on Short Term Loan 53.01 -
Bank Charges 36.77 -
89.78 -
SCHEDULES FORMING PART OF THE BALANCE SHEETAND PROFIT AND LOSS ACCOUNT
SCHEDULE: 13
SIGNIFICANT ACCOUNTING POLICIES AND NOTES TOFINANCIAL STATEMENTS
1. Company Background
2. Significant Accounting Policies
(a) Basis of preparation of financial statements
(b) Use of estimates
(c) Fixed Assets
21st Century Infra Tele Limited (“Company”) wasincorporated on June 28, 2007 as a private limitedCompany. It was converted into public Company onAugust 25, 2008. The Company has been formed top rov i de pass i ve i n f ras t r uc tu re suppo r t t otelecommunication service providers. The Department ofTelecommunications, Ministry of Communication and IT,Government of India has registered the Company asInfrastructure Provider Category I (IP-I) with effect fromSeptember 30, 2008. The Company has entered into aBusiness Transfer Agreement with Tata Teleservices(Maharashtra) Limited (Holding Company) and acquiredassets on a Slump Sale as going concern.
The Company has become the wholly owned subsidiary ofTata Teleservices (Maharashtra) Limited (TTML) w.e.f.July 1, 2008.
The accounts have been prepared to comply in allmaterial aspects with applicable accountingprinciples in India, the Accounting Standardsnotified in the Companies (Accounting Standards)Rule, 2006 and relevant provisions of theCompanies Act, 1956.
The preparation of financial statements inconformity with generally accepted accountingprinciples requires estimates and assumptions to bemade that affect the reported amounts of assets andliabilities and disclosure of contingent liabilities onthe date of the financial statements and the reportedamounts of revenues and expenses during thereporting period. Differences between actual resultsand estimates are recognised in the periods in whichthe results are known / materialise.
Fixed assets are stated at their cost of acquisition orconstruction, less accumulated depreciation. Costincludes all cost incurred to bring the assets to theirworking condition and location.
Assets retired from active use and held for disposalare stated at lower of net book value or net realizablevalue.
Capital Inventory comprises tower equipment andaccessories that are carried under Capital work-in-progress till such time as they are issued for newinstallation or as replacement.
92
Expenditure related to and incurred during theconstruction period of cell sites are capitalised aspart of the construction cost and allocated to therelevant fixed assets.
Fixed Assets are depreciated on a straight linemethod based on estimates of their useful economiclives:
Plant and Machinery- Network Equipments 12- Office Equipments 3- Goodwill 5
The estimated useful economic life of theinfrastructure assets which have been acquiredfromTTML under BusinessTransfer Agreement was12 years from the date of purchase of assets. Thepresent estimated useful economic life of the saidassets is residual useful economic life i.e. theoriginal estimated useful life reduced by the periodactually used by TTML.The Company has arrived ata single residual useful economic life for the assetsoriginally acquired in a single accounting year onvarious dates by using weighted average method.The residual useful economic life is as follows:
Depreciation on additions and deletions to assetsduring the period is charged to revenue pro-rata tothe period of their use.
Contributions to the Provident and SuperannuationFunds are made in accordance with the rules of theFunds.
Leave encashment and gratuity are provided for onthe basis of actuarial valuation as at the end of theperiod.
All income and expenditure are accounted for onaccrual basis.
Revenue is recognised when it is earned and nosignificant uncertainty exists as to its ultimaterealisation or collection.
Borrowing costs attributable to the acquisition of a
(d) Depreciation
Useful Life (in years)
(e) Employee benefits
(f) Revenue Recognition
(g) Borrowing costs
Sl.No.
The financial yearin which assetsoriginally acquired
Residual usefuleconomic lifein years
1 2003 – 04 6.91
2 2004 – 05 8.62
3 2005 – 06 8.73
4 2006 – 07 10.39
5 2007 – 08 10.33
6 2008 – 09 upto thedate of acquisition
11.70
th14 Annual Report 2008-2009
21ST CENTURY INFRA TELE LIMITED
qualifying asset, as defined in AS 16 on “BorrowingCosts”, are capitalised as part of the cost ofacquisition. Other borrowing costs are expensed asincurred.
Contingent Liabilities as defined in AS 29 on“Provision, Contingent Liabilities and ContingentAssets” are disclosed by way of notes to accounts.Provision is made if it becomes probable that anoutflow of future economic benefits will be requiredfor an item previously dealt with as a contingentliability.
Fringe Benefits Tax (FBT) payable under theprovisions of Section 115WC of the Income Tax Act,1961 is, in accordance with the Guidance Note onAccounting for Fringe Benefits Tax issued by theICAI regarded as an additional income tax andconsidered in determination of the profits/(losses)for the period.
Assets taken on Lease under which all significantrisks and rewards of ownership are effectivelyretained by the lessor are classified as OperatingLease.Lease Payments under Operating leases arerecognized as expenses as incurred in accordancewith the respective Lease Agreements.
The Cash Flow Statement is prepared by the indirectmethod set out in AS 3 on “Cash flow Statement”andpresent Cash flows by operating, investing andfinancing activities of the Company.
The Company reports basic and diluted earningsper share in accordance with AS 20 on “Earning PerShare”. Basic earning per share is computed bydividing the net profit or loss for the period by theweighted average number of Equity sharesoutstanding during the period. Diluted earnings pershare is computed by dividing the net profit or lossfor the period by the weighted average number ofEquity share outstanding during the period asadjusted for the effects of all dilutive potential equityshares, except where the results are anti dilutive.
An asset is considered impaired in accordance withAS 28 on “Impairment of Assets” when at thebalance sheet date there are indications ofimpairment and the carrying amount of the asset orwhere applicable the cash generating unit to whichthe asset belongs, exceeds its recoverable amounti.e. the higher of the assets' net selling price andvalue in use. In assessing the value in use, theestimated future cash flows expected from thecontinuing use of the asset and from its ultimate
(h) Contingent Liabilities
(i) Fringe BenefitsTax
(j) Operating Leases
(k) Cash Flow Statement
(l) Earning per share
(m) Impairment of assets
93
disposal are discounted to their present valuesusing a pre-determined discount rate. The carryingamount is reduced to the recoverable amount andthe reduction is recognized as an impairment loss inthe profit and loss account.
Investments are stated at lower of cost or netrealizable value.
Current tax is the amount of tax payable on thetaxable income for the year as determined inaccordance with the provisions of the Income TaxAct, 1961. Deferred tax is recognised for all timingdifferences, subject to the consideration ofprudence, applying the tax rates that have beensubstantively enacted by the Balance Sheet date.
The Company has acquired the business including itsassets, liabilities and other obligations relating to passiveinfrastructure division on slump sale basis as a goingconcern from Tata Teleservices (Maharashtra) Limited(“Seller”) as per Business Transfer Agreement (BTA). TheBTA provides that the business is being sold as goingconcern with effect from the effective date i.e. September30, 2008 at the end of business hour. The lump sumconsideration is Rs. 29,330 Lakhs (Rupees two hundredninety three crores thirty lakhs only) which the Companyhas paid to Seller.
The identifiable acquired Business assets and Liabilitieshave been recognized by the Company at existingcarrying amounts (the value in the books of seller aftercharging depreciation upto September 30, 2008) whichwas ascertained & certified by an independent valuer onthe effective date. The difference of Rs. 6.63 Lakhsbetween existing carrying amounts of assets & liabilityrecognized in the books of the Company and saleconsideration is treated as goodwill which shall beamortized in five years at each year end. The list ofacquired business assets and liabilities with value aregiven below.
(n) Investments
(o) Taxes on Income
3. Acquisition of Business relating to passiveinfrastructure division
Sl.No.
Description ofassets / liability
AmountRs. in Lakhs
1 Fixed Assets (Towers& Office Equipment)
27,191
2 CWIP (including capital inventory) 1,172
3 Other Current Assets (Prepaid Rent,Maintenance, Insurance, Deposits)
1,304
4 Total Assets 29,667
5 Current Liabilities (RetentionMoney and Creditors)
344
6 Net Assets 29,323
4. Business Contract
5.
6.
7. Estimated amount of contract to be executed oncapital account and not provided
By virtue of Business Transfer Agreement, the right andliabilities with underlying business contracts entered intoby TTML and effective on the date of completion of thisagreement and thereafter stand transferred to theCompany with effect from completion date.The Companyshall at its own cost, after and with effect from theCompletion Date carry out and complete for its ownaccount the Business Contracts to the extent that thesame have not been performed prior to the CompletionDate and in accordance with the terms of the relevantBusiness Contract.
In so far as the benefit or burden of any of the BusinessContracts cannot effectively be assigned to the Companyexcept by an agreement or novation with or by consent tothe assignment from the person, firm or Companyconcerned, the Company is in the process to get suchnovation or assignment from parties of the contract as onSeptember 30, 2008. The novation or assignment arebeing executed to the following amounts which arepayable and receivable in cash or kind as on balancesheet date and included in the loans and advances in thebalance sheet.
The Company has billed Infrastructure sharing revenue inthe books of account for the customers as per thecommercial information shared by TTML. The transfer/execution of new Infrastructure Sharing agreements(currently between TTML and Customers) between theCompany and Customers is in progress.
The Company has increased the authorized share capitalfrom Rs. 10 Lakhs to Rs. 500 Lakhs on September 19,2008 and to Rs.1,300 Lakhs w.e.f March 20, 2009.
As atJune 30, 2008
Rs. n LakhsEstimated amount ofcontracts remaining tobe executed on capitalaccount and not providedfor (net of advances) -
As atJune 30, 2008
Rs. in Lakhs(i) Claims against the
company notacknowledged as debts -
As atMarch 31,2009
Rs. in Lakhs i
4,900.47
8. Contingent liabilities :As at
March 31,2009Rs. in Lakhs
53.25
94
Sl.No.
Particulars Amount(Rs. in Lakhs)
1 Deposit for Cell Site 92.76
2 Deposits for Electricity 312.61
3 Deposits for Fuel 67.96
Total 473.33
9. Payment to Auditors (excluding service tax):
10.
11.
12.
13.
14.
15. Related Party disclosures (in terms of AccountingStandard - 18)
Note:
For the periodended
June 30, 2008Rs. in Lakhs
Audit fees 0.12
ICICI Prudential
Liquid Plan Super
Inst.Growth Plan 77,01,448.944 10 1,000.00
For the periodended
March 31,2009Rs. in Lakhs
4.00
No.of Face Cost (Rs.
Units Value (Rs.) in Lakhs)
Following units (Investments) have been purchased by theCompany during the period ended March 31, 2009
As per information available with the Company, none ofthe creditors have confirmed that they are registeredunder the Micro, Small and Medium EnterprisesDevelopment Act, 2006.
The Company does not have any foreign currencyexposure. The Company does not have any derivativestransactions.
The Company is engaged in the business of providingpass ive in f ras t r uc tu re suppor t ser v ices toTelecommunication Service Provider. These, in thecontext of AS 17 on “Segment Reporting” are consideredto constitute a single reportable segment.
Deferred tax credits have not been recognized as there isno virtual certainty for realization of such credits.
(Rs. in Lakhs)
The Company has become the wholly owned subsidiary ofTata Teleservices (Maharashtra) Limited w.e.f July 1,2008.
(Figures inclusive of ServiceTax)
For the Period from July 1, 2008 toMarch 31, 2009
Holding
Company
Tata Teleservices
(Maharashtra)Limited
Income :
Infrastructure Sharing Revenue 1,740.63
Reimbursement of Expenses :
Network Expenses 2,669.90
Expenses :
Salaries on deputation 25.60
Purchase of Passive Infrastructure Business:
- Net Value payable for Slump Sale of Tower 29,330.00
Business Assets
Equity share capital issued during the period 7,499.00
Outstanding as on March 31, 2009
Advance from Customer 1,189.46
Equity share capital as on March 31, 2009 7,500.00
th14 Annual Report 2008-2009
21ST CENTURY INFRA TELE LIMITED
15. Related Party disclosures (in terms of Accounting Standard - 18)List of Holding Company and Fellow Subsidiaries of 21st Century Infra Tele Limited as on March 31, 2009
A Holding Company
Tata Teleservices ( Maharashtra) Limited.
Tata Sons Limited (Ultimate Holding Company of Tata
Teleservices (Maharashtra) Limited)
B Fellow Subsidiaries
1 Actve Digital Services Pvt Ltd (W.E.F. 21.04.2008)
2 Computational Research Laboratories Limited
3 Concept Marketing and Advertising Limited
4 e-Nxt Financials Limited
5 Ewart Investment Private Limited
6 Ewart Investments Limited
7 Good Health TPA Services Limited (W.E.F. 11.09.08)
8 Infiniti Retail Limited (formerly Value Electronics Limited)
9 Nova Integrated Systems Limited (W.E.F. 26.09.08)
10 Panatone Finvest Limited
11 Tara Aerospace Systems Limited (W.E.F. 26.09.08)
12 Tata Advanced Systems Limited (W.E.F. 26.09.08)
13 Tata AG, Zug
14 Tata AIG General Insurance Company Limited
15 Tata AIG Life Insurance Company Limited
16 Tata Asset Management (Mauritius) Pvt Limited
17 Tata Asset Management Limited
18 Tata Business Support Services Limited (formerly E2E SerWiz
Solutions Limited)
19 Tata Capital Advisors Pte. Limited (W.E.F. 05.12.08)
20 Tata Capital Housing Finance Limited (W.E.F. 15.10.08)
21 Tata Capital Limited (formerly Primal Investment and Finance Limited)
22 Tata Capital Markets Limited
23 Tata Capital Markets Pte. Limited (W.E.F. 05.12.08)
24 Tata Capital Pte. Limited (W.E.F. 17.07.08)
25 Tata Consultancy Services Limited
26 Tata Housing Development Company Limited (formerly THDC Limited)
27 Tata International AG, Zug
28 Tata Internet Services Limited
29 Tata Investment Corporation Limited
30 Tata Limited
31 Tata Pension Management Ltd
32 Tata Petrodyne Limited
33 Tata Realty and Infrastructure Limited
34 Tata Securities Limited
35 Tata Sky Limited
36 Tata Teleservices Limited
37 Tata Trustee Company Pvt. Ltd.
38 TC Travel And Services Limited (W.E.F. 15.10.08)
39 TCE Consulting Engineers Limited
40 Tce QSTP-LLC (W.E.F. 07.07.08)
41 TRIF Investment Management Limited
42 Wireless TT Info Services Limited
43 Acme Living Solutions Pvt. Ltd. (W.E.F.29.01.09)
44 Ahinsa Realtors Pvt. Ltd.
45 Ardent Properties Pvt. Ltd. (W.E.F.19.12.08)
46 Arrow Infra Estates Pvt. Ltd. (W.E.F.30.09.08)
47 Gurgaon Construct Well Pvt. Ltd. (formerly Unitech Construct Well
Pvt. Ltd.) (W.E.F.30.09.08)
48 Gurgaon Infratech Pvt. Ltd. (formerly Unitech Infratech Pvt. Ltd.)
(W.E.F.30.09.08)
49 Gurgaon Realtech Ltd.(formerly Unitech Real Tech Ltd.) (W.E.F.30.09.08)
50 Landscape Structures Pvt. Ltd. (W.E.F.19.12.08)
51 Navinya Buildcon Pvt. Ltd.
52 Pioneer Infratech Pvt. Ltd.
53 TRIF Amritsar Projects Private Limited ((W.E.F.18.09.08 and Ceased to be
a subsidiary w.e.f. 01.03.09)
54 TRIF Constructions Pvt. Ltd. (W.E.F.12.12.08)
55 TRIF Erectors Pvt. Ltd. (W.E.F.31.12.08)
56 TRIF Gandhinagar Projects Pvt. Ltd.
57 TRIF Hyderabad Projects Pvt. Ltd.
58 TRIF Infrastructure Pvt. Ltd.
59 TRIF Kochi Projects Pvt. Ltd.
60 TRIF Kolkata Projects Pvt. Ltd.
61 TRIF Mega Projects Pvt. Ltd (W.E.F.31.12.08)
62 TRIF Modern Superstructures Pvt. Ltd. (W.E.F.31.12.08)
63 TRIF Property Development Pvt. Ltd.
64 TRIF Real Estate and Development Pvt. Ltd.
65 TRIF Realty Projects Pvt. Ltd.
66 TRIF Structures & Builders Pvt. Ltd. (W.E.F.31.12.08)
67 TRIF Trivandrum Projects Pvt. Ltd.
68 TRIL Airport Developers Ltd.
69 TRIL Constructions Ltd.
70 TRIL Developers Ltd.
71 APONLINE Limited
72 C-Edge Technologies Limited
73 CMC Americas Inc
74 CMC Limited
75 Custodia De Documentos Interes Limitada
76 Diligenta Limited
77 Financial Network Services (Africa) (Pty) Ltd.
78 Financial Network Services (Beijing) Co. Ltd.
79 Financial Network Services (Europe) plc (Ceased to be a subsidiary
w.e.f. 2.12.2008 )
80 Financial Network Services (H.K.) Limited
81 Financial Network Services Malaysia Sdn Bhd (Under Voluntary Liquidation)
82 MP Online Limited
83 PT Financial Network Services
84 PT Tata Consultancy Services Indonesia
85 Syscrom S.A.
86 Tata America International Corporation
87 Tata Consultancy Services (Africa) (PTY) Ltd.
88 Tata Consultancy Services (China) Co., Ltd.
89 Tata Consultancy Services (Philippines) Inc. (w.e.f. 19.9.2008 )
90 Tata Consultancy Services (South Africa) (PTY) Ltd.
91 Tata Consultancy Services (Thailand) Limited (w.e.f. 12.5.2008 )
92 Tata Consultancy Services Argentina S.A. (formerly TCS Argentina S.A. )
93 Tata Consultancy Services Asia Pacific Pte Ltd.
94 Tata Consultancy Services Belgium SA
95 Tata Consultancy Services BPO Chile SA (Formerly Tata Consultancy
Services Chile Limitada)
96 Tata Consultancy Services Canada Inc.(formerly Exegenix Canada Inc. )
97 Tata Consultancy Services Chile S.A.
98 Tata Consultancy Services De Espana S.A.
99 Tata Consultancy Services De Mexico S.A., De C.V.
100 Tata Consultancy Services Deutschland GmbH
101 Tata Consultancy Services Do Brasil Ltda (Formerly Tata Consultancy
Services Do Brasil S.A.)
102 Tata Consultancy Services France SAS (Formerly TKS - Tecknosoft
(France) SAS)
103 Tata Consultancy Services Japan Ltd.
104 Tata Consultancy Services Luxembourg S.A
105 Tata Consultancy Services Malaysia Sdn Bhd
106 Tata Consultancy Services Morocco SARL AU
107 Tata Consultancy Services Netherlands BV
108 Tata Consultancy Services Portugal Unipessoal Limitada
109 Tata Consultancy Services Sverige AB
110 Tata Consultancy Services Switzerland Ltd. (Formerly TKS - Tecknosoft S.A.)
111 Tata Information Technology (Shanghai) Company Limited
112 Tata Infotech (Singapore) Pte. Limited
113 Tata Infotech Deutschland GmbH (Ceased to be a subsidiary
w.e.f. 22.10.2008 )
114 TATASOLUTION CENTER S.A
115 TCS e-Serve America, Inc (w.e.f.10.2.2009 )
116 TCS e-Serve International Limited (Formerly CGSL International
Limited)(w.e.f. 31.12.2008 )
117 TCS e-Serve Limited (Formerly Citigroup Global Services Limited)
(w.e.f. 31.12.2008 )
118 TCS Financial Management, LLC
119 TCS Financial Solutions Australia Holdings Pty Limited (Formerly
Financial Network Services (Holdings) Pty. Limited)
120 TCS Financial Solutions Australia Pty Limited (Formerly Financial
Network Services Pty. Limited)
121 TCS FNS Pty. Limited
122 TCS Iberoamerica SA
123 TCS Inversiones Chile Limitada
124 TCS Italia SRL
125 TCS Management Pty Ltd.
126 TCS Solution Center S.A.
127 WTI Advanced Technology Ltd.
95
16.
1 .
The disclosure as required under AS 15 regarding theCompany's gratuity plan is as follows:
Value of Capital Inventory consumed during the period:
2007-08Rs. in %
Lakhs
Indigenous - -
- -
2008-09Rs. in %
Lakhs
0.28 100
Total 0.28 100
7
Actuarial Assumptions:
Discount rate NA
Unfunded Liability NA
Benefit Paid NA
Actuarial Gain / (loss) on PlanAssets
NA
Fair Value of Plan Assets atthe end of the period/year
NA
Total Actuarial Loss Recognized NA
7.75%
Rate of increase incompensation levels ofcovered employees
NA6.50%
Rate of Return on Plan Assets NANA
Fair Value of Plan Assets at thebeginning of the period/year
NANA
Expected Return on PlanAssets
NANA
NIL
NA
NA
NA
NIL
Projected benefit obligation,end of the period/year
NILNIL
Fair value of plan assets atthe end of the period/year
NANIL
Net liability recognized in theBalance Sheet
NILNIL
Particulars As atJune 30, 2008
Rs. in Lakhs
Service cost NIL
Interest cost NIL
Actuarial gain/(loss) on obligation NIL
Benefits paid NIL
Projected benefit obligation,end of the period/year
NIL
As atMarch 31, 2009
Rs. in Lakhs
Projected benefit obligation,beginning of the period/year
NILNIL
1.06
NIL
(1.06)
NIL
NIL
96
th14 Annual Report 2008-2009
18. Asset under construction includes the followingincidental expenditure incurred during theconstruction period:
19. Earning Per Share
20. Operating Lease:
21.
22.
23.
24.
As per our attached report of even date
2007-08Rs. in Lakhs
Salary -
Rent -
June 28, 2007 toJune 30, 2008
i) Loss afterTax
(Rs. in Lakhs) (0.41)
ii) Weighted average
number of shares
outstanding. 10,000
iii) NominalValue of
Equity Shares (Rs ) 10
iv) Basic and Diluted
Earnings per Share (Rs.) (4.11)
2008-09Rs. in Lakhs
4.80
69.66
Total 74.46 -
July 1,2008 toMarch 31,2009
(1,026.29)
2,672,555
. 10
(38.40)
(including maintainence)
Operating lease rentals charged to revenue during theperiod are Rs. 67.47 Lakhs (Previous Year NIL). None ofthe lease agreements have minimum period clause andare cancelable at will by either party giving a prior notice of30 to 90 days.
The Charges on the Assets of the Company for Term Loantaken from United Bank of India for Rs. 13,000 Lakhs arein the process of being created.
The appointment of a Manager and a whole timeSecretary is under process.
The Company during the year has changed its accountingyear from July - June to April - March to bring uniformity inline withTataTeleservices (Maharashtra) Limited (HoldingCompany) accounting year. Therefore accounting year2008-09 is for 9 months starting from July 08 to March 09.
Previous period relates to a period of June 28, 2007 toJune 30, 2008 and current period is July 1, 2008 to March31, 2009, hence the periods are not comparable.
For PKF Sridhar & Santhanam For and on behalf of the Board
Radhika Hariharan S. Venkatesan H. D. Khosla
Sujir Nayak
Chartered Accountants
Partner (Director) (Director)
(Manager)
Place: Mumbai Place: MumbaiDate: May 8, 2009 Date: May 8, 2009
21ST CENTURY INFRA TELE LIMITED
97
CASH FLOW STATEMENT FOR THE PERIOD ENDED MARCH 31, 2009July 1, 2008
to
March 31, 2009
June 28, 2007
to
June 30, 2008
Amount Amount
(Rs. in Lakhs) (Rs. in Lakhs)
A Cash flows from operating activities
Net Loss before Extraordinary item and tax (1,026.14) (0.41)
Adjustments for :
Depreciation 1,634.17 -
Finance and Treasury charges 89.78 -
1,723.95 0.00
Operating Profit / (Loss) before working capital changes 697.81 (0.41)
Increase in Sundry Debtors (1,194.09)
Increase in Loans and Advances (2,072.79) -
Increase in Current liabilities and Provisions 3,164.43 0.41
Cash Generated from operations (102.45) 0.41
Net Cash generated from operating activities 595.36 (0.00)
B Cash flow from investing activities
Purchase of Fixed Assets (30,204.22) -
Investment (1,000.00)
Net Cash used for investing activities (31,204.22) 0.00
C Cash flow from financing activities
Proceeds on account of shares issued 7,499.00 1.00
Proceeds from Term borrowings (Secured) 13,000.00
Proceeds from Short term borrowings (Unsecured) 10,200.00
Finance and Treasury charges paid (89.78) -
Net cash generated from financing activities 30,609.22 1.00
Net (decrease)/increase in cash or cash equivalents 0.36 1.00
Cash and cash equivalents at beginning of the period 1.00 -
Cash and cash equivalents at end of the period 1.36 1.00
0.36 1.00
Note to Cash Flow Statement
Purchase of Fixed Assets is inclusive of Capital Work-in-Progress
As per our attached report of even date
For PKF Sridhar & Santhanam For and on behalf of the Board
Chartered Accountants
Radhika Hariharan S. Venkatesan H. D. Khosla
Partner (Director) (Director)
Place: Mumbai Place: Mumbai
Date: May 8, 2009 Date: May 8, 2009
Sujir Nayak
(Manager)
98
BALANCE SHEET ABSTRACT AND GENERAL BUSINESS PROFILE
I Registration Details
Registration No. 01-054651
State Code 01
Balance Sheet Date March 31, 2009
II Capital raised during the period (Rs. in Lakhs)
(Equity Share Capital & Security Premium Account)
Public Issue -
Rights Issue -
Bonus Issue -
Private Placement 7,499.00
III Position of Mobilisation and Deployment of Funds (Rs. in Lakhs)
Total Liabilities 30,700.00
Total Assets 30,700.00
Sources of Funds
Paid-up Capital 7,500.00
Reserves & Surplus -
Secured Loans -
Unsecured Loans 13,000.00
Application of Funds
Net Fixed Assets (including Capital Work-in-Progress) 30,847.06
Net Current Assets (1,173.61)
Accumulated Losses 1,026.55
IV Performance of the Company (Rs. in Lakhs)
Turnover (including other income) 1,976.23
Expenditure 3,002.37
Loss Before Tax (1,026.14)
Loss After Tax (1,026.14)
Earning Per Share (Rs.) (38.40)
Dividend Rate -
V Generic Names of three Principal Products/Services of the Company
Item Code No. (ITC Code) Not Applicable
Product Description Telecom Infrastructure Service Provider
For and on behalf of the Board
Place: Mumbai S. Venkatesan H. D. Khosla
Date: May 8, 2009 (Director) (Director)
th14 Annual Report 2008-2009
Sujir Nayak
(Manager)
21ST CENTURY INFRA TELE LIMITED
ATTENDANCE SLIP
PROXY FORM
Fourteenth Annual General Meeting on Thursday, August 13, 2009
Reg. Folio No…………………… ……… DP ID*………… …………….. Client ID*…………………...…………………
Name …………………………………………………………………….………………………………………………………………
Address ……………………………………………………………………….…………………………………………………………
……………………………………………………………………………………….……………………………………………………
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I certify that I am a registered shareholder / proxy for the registered shareholder of the Company. I hereby record my presenceat the FOURTEENTH ANNUAL GENERAL MEETING of the Company at Kamalnarayan Bajaj Hall & Art Gallery, BajajBhavan, Jamnalal Bajaj Marg, 226, Nariman Point, Mumbai - 400 021 at 1500 hours onThursday, August 13, 2009.
Proxy name in Block Letters …………… ……………………………… ………………………………………………
Member/Proxy's Signature …………………… ...……………………………………………………………………………
Note: Please fill in this slip and hand over at the ENTRANCE TO THE AUDITORIUM.
* Applicable for shareholder(s) holding shares in electronic (dematerialized) form.
Reg. Folio No……....………………………… DP ID*……………………….. Client ID*………………………………………
I/We .................................................................................................................................................................................... of
in the district of
being a member/members of the above named Company hereby appoint
of .... in the district of
or failing him of
...... in the district of as my/our proxy
to vote for me/us on my/our behalf at the FOURTEENTH ANNUAL GENERAL MEETING of the Company to be held on
Thursday, August 13 , 2009 and at any adjournment thereof.
Signature .....
Signed this day of 2009.
This form in order to be effective should be duly stamped, completed and signed and must be deposited at theRegistered Office of the Company, not less than 48 hours before the meeting.
* Applicable for investors holding shares in electronic (dematerialised) form.
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Member/ … ..
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Note:
Registered Office: Voltas Premises, T B Kadam Marg, Chinchpokli, Mumbai 400 033.
Registered Office: Voltas Premises, T B Kadam Marg, Chinchpokli, Mumbai 400 033.
Affix a15 ps.
RevenueStamp
